Fannie Mae has launched an initiative to expand the availability of multifamily units that accept federal Housing Choice Vouchers (HCVs). Its Expanded Housing Choice initiative, which will start in North Carolina and Texas for 12 months, will provide lower financing costs to the states’ multifamily property owners who accept Department of Housing and Urban Development (HUD) HCVs.
“By offering a pricing incentive to property owners in Texas and North Carolina, we think we’re going to be able to help more people access more quality affordable rental housing, which is part of our mission,” says Michele Evans, executive vice president and head of multifamily at Fannie Mae. “This is the opportunity to raise the awareness of HUD’s HCV program. In the end, we hope it will increase the number of vouchers accepted. That’s what our goal is.”
Evans says the biggest issues for households is first securing a voucher and then finding a property that will accept the voucher in a short period of time.
“If we can incentivize a property owner to participate in this initiative, particularly in markets where vouchers as an acceptable source of income are not required by law, then we can increase the number of properties available for voucher holders,” she says.
The initiative has been in the works for two years, and, instead of rolling out nationwide, Fannie Mae wanted to focus its people, resources, and energy on more targeted efforts. North Carolina and Texas were selected because they are states where vouchers are not accepted as a source of income, and both offer a fair number of affordable multifamily housing units.
“We help finance a lot of loans in these two states, and we felt like this would be an area where we could get some traction,” Evans says.
According to Evans, the initiative is a win-win for property owners and renters.
“The lower pricing is something that will pique owners’ interests, but we’re also trying to bring a greater level of awareness of the benefits of accepting vouchers,” she says.
Once a voucher holder finally lands in an apartment, they typically will stay for nine years on average, creating less turnover in rent rolls and properties, Evans adds. In addition, vouchers offer a steady stream of rental payments backed by HUD and can aid borrowers with an eye on their ESG footprints and social components.
Related to the voucher holders, Evans says it’s important to take a deeper look at the population: 78% of voucher holders are women, and 60% are Black or Hispanic.
“We think getting this population of renters access to affordable housing is a huge need in the marketplace,” she adds. “We also think that given what’s going on with inflation and the rising cost of living, as you lower rental expenses, you have more to pay for food, clothing, and general transportation. We think this is a real win-win for people.”