Lee Harris moderates a session on debt financing
strategies at AHF Live

Good news for affordable housing owners and developers: Debt financing continues to be readily available for strong projects.

“It’s a good time to be doing deals,” said Rob Hoskins, managing partner for affordable housing developer the NuRock Cos., at AHF Live: The Affordable Housing Developers' Summit in Chicago.

Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development (HUD) in particular continue to make debt capital more available through their program lenders.

HUD lending

“HUD continues to be really focused on affordable housing,” said Carolyn McMullen, vice president for Walker & Dunlop. “They really want to make deals work.”

However, HUD is also in the midst of reorganizing its field offices, which will eventually close some sites. That means some level of delay, even though industry experts say the restructuring will eventually make the process of taking out a loan much more efficient. “For the next year and a half it’s going to be a little confusing,” said McMullen. “Most of the HUD workers are distracted. They are trying to figure out whether to move or retire."

Despite the confusion, deals are still getting done. HUD’s new Low-Income Housing Tax Credit Pilot Program, which aims to speed the processing time for Federal Housing Administration-backed deals that use tax credits, is meeting its deadlines for closing loans. “We are getting commitments in two months and closing in three months,” said McMullen.

Sometimes borrowers face odd requests from the bureaucrats at HUD, but they described the loan products as being worth the hassle. “If they ask you for a bucket of blue leaves,” joked NuRock’s Hoskins. “Then you buy a bucket and some paint… you paint the damn leaves blues and you give it to them.”

Fannie and Freddie

Fannie Mae and Freddie Mac are also both doing a brisk business of lending to affordable multifamily properties, despite uncertainty whether Congress will eventually reform or rip apart the agencies. “Affordable lending is going to be a key component of what we do,” said Kimball Griffith, vice president of multifamily affordable sales and investment for Freddie Mac.

Freddie Mac has been especially aggressive in fighting to meet its affordable housing goals, offering interest rates about 15 basis points lower than Fannie Mae in recent deals, according to McMullen. As various plans for reform of Fannie Mae and Freddie Mac move through Congress, industry experts are increasingly hopeful that at least Fannie and Freddie’s multifamily lending business will continue to operate. “There is a place for affordable housing in whatever future we have,” said Angela Kelcher, director of multifamily affordable production for Fannie Mae.

Bank lenders

A change being considered by the Office of the Comptroller of the Currency may also make bank financing more available in some areas by increasing the areas in which commercial banks can lend to satisfy their obligations under the Community Reinvestment Act (CRA). “Can we satisfy our CRA need in New York City by going upstate?” asked Richard Gerwitz, managing director at Citi Community Capital. The OCC’s answer could have a huge impact on the kind of financing that is available to projects in areas on the fringe of major metropolitan areas.