On August 5, the Federal Housing Finance Agency (FHFA) announced that the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, can now each double their annual investment in Low Income Housing Tax Credits (LIHTC) to $2 billion. In addition, FHFA is requiring one-half of their total $4 billion annual investment be invested in difficult to serve housing markets and of that $2 billion 20 percent ($400 million) be for housing in rural markets. The Housing Assistance Council (HAC) applauds this move and the significant impact that it will have on driving affordable housing investment to otherwise underserved small town and rural America.

“LIHTC is the biggest driver of affordable housing development in the country, but rural communities often struggle to access a fair and equitably priced share of LIHTC equity,” said David Lipsetz, President and CEO of HAC. “Twenty percent of our country’s population lives in rural places, so we applaud FHFA Director Pulte for requiring that a proportionate amount of GSEs’ LIHTC equity investments in difficult to serve markets target small town and rural America.”

The Housing and Economic Recovery Act of 2008 imposed on the GSEs a Duty to Serve obligation to facilitate a secondary market for mortgages on housing for low- and moderate-income families in three underserved markets: rural housing, manufactured housing, and affordable housing preservation. Starting in 2017, FHFA permitted Fannie Mae and Freddie Mac to reenter the LIHTC market as equity investors, bringing LIHTC investments into their Duty to Serve activities. But until now, no specific set-aside existed for LIHTC investments in Duty to Serve rural markets.

“Over the past half century, federal housing policy—indeed federal policymaking writ large–has been designed with urban and suburban economies at its center,” noted Lipsetz. “Fannie and Freddie have played a positive role building wealth and opportunity through housing, but their business model falters with the low volumes and smaller loans that characterize most rural housing markets. Similarly, LIHTC works most seamlessly in multifamily projects of a size and income-mix that differ from the stock typical of rural communities. In this context, rural America only sees a fair share of investment when national leaders put a finger on the scale. HAC appreciates Director Pulte doing exactly that with regard to the GSEs’ Duty to Serve.”

“Today’s announcement comes on the heels of the passage of the One Big Beautiful Bill Act, which permanently expanded the 9 percent LIHTC allocation, but failed to include bipartisan priorities that would have leveled the playing field for rural and Tribal areas,” noted Lipsetz. “Adding a Difficult Development Area (DDA) designation to rural and Tribal would have provided a 30 percent basis boost that makes full the value of the credits in these underserved areas. Nor did the bill align Opportunity Zone (OZ) and LIHTC ‘substantial improvement’ standards to allow these programs to work well together to preserve and repair rural homes.”

“HAC hopes Congress will build on FHFA’s important action today and finish the job of making the nation’s largest housing and community development tax subsidies work just as well in small towns and rural places nationwide.”

Click here to see how HAC’s Loan Fund has helped our partners combine LIHTC equity and other resources to create and preserve rural affordable housing.