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  • Comment Detail

  • Date: 06/06/18
    First Name: John
    Last Name: Errigo
    Organization: Minnesota Equity Fund
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA83

  • Comment

    I'm writing regarding the proposed changes to the Affordable Housing Program (AHP), and specifically the concept of allowing the Federal Home Loan Bank to look at a developer/sponsor's assets when evaluating the recapture of AHP Funds that are associated with a specific project. One of the goals of the proposed changes is to make sure that AHP Funds can be used optimally with other federal funding sources. This presumably includes the Low Income Housing Tax Credit (LIHTC) program, which is responsible for nearly all affordable housing development in the United States. Under the LIHTC program, all project loans (permanent, not interim) must be non-recourse to the project owner (also the borrower). That is, they can only be secured/collateralized by a mortgage lien on the affected property, and repayment cannot be guarantied by the borrower. If the Federal Home Loan Bank is allowed to look to a developer/sponsor's assets for the repayment of an AHP Loan, and not only the affected property, then the developer/sponsor would effectively become a guarantor, and the AHP Loan would have to be deducted from the LIHTC basis of the affected property. This would result in less private LIHTC equity investment, causing a larger funding gap, and reducing the value of the AHP Loan. To ensure that AHP Loans remain a viable, effective, and efficient resource for affordable housing development, they must be non-recourse to the borrower and secured/collateralized only by the affected property and not by the developer/sponsor's assets. Thanks for soliciting feedback on this proposal and for providing an easy way to share that feedback.