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80 80 INVESTMENT GOVERNMENT PROPERTY PRESERVATION FHFA INITIATIVE AIMED AT NARROWING THE HOMEOWNERSHIP GAP In a move to support the nation's underserved housing markets, the Biden administration and the Federal Housing Finance Agency (FHFA) have announced that Fannie Mae and Freddie Mac (the GSEs) can each invest up to $850 million annually in the Low-Income Housing Tax Credit (LIHTC) market as equity investors. Previously, each GSE was limited to $500 million of investment annually in the LIHTC market. Within this $850 million annual funding cap, any investments above $425 million each year are required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors. is move by the FHFA marks an increase in the amount of investments under the cap that must be made in targeted transactions that either support housing in Duty to Serve- designated rural areas, preserve affordable housing, support mixed-income housing, provide supportive housing, or meet other affordable housing objectives. "e severe shortage of affordable housing in America requires coordinated government action," Acting Director Sandra L. ompson said. "As part of the federal government's response, FHFA is instructing Fannie Mae and Freddie Mac to boost the housing supply in communities across the country by significantly increasing their Low-Income Housing Tax Credit investments and by expanding opportunities for local families to access affordable homeownership and rental housing. In addition, FHFA will begin to study the interaction between exclusionary zoning and our regulated entities." As supply constraints have intensified, large investors have stepped up their real estate purchases, including of single-family homes in urban and suburban areas. One out of every six homes purchased in Q2 was acquired by investors, and reports indicate that in some markets, that number is one in four. Within investor purchases, typically more than 35% of purchases are made by investors that own more than 10 properties. Large investor purchases of single-family homes and conversion into rental properties speeds the transition of neighborhoods from homeownership to rental and drives up home prices for lower cost homes, making it harder for aspiring first-time and first-generation home buyers, among others, to buy a home. At the same, these purchases are unlikely to meaningfully boost supply in the lower-cost portions of the rental market, as investors charge more for rent to recoup higher purchase costs. e LIHTC is the primary government program available to address the shortage of affordable rental housing through the creation and preservation of affordable units in underserved areas throughout the country. FHFA will continue to evaluate the GSEs' participation in the LIHTC equity market on an ongoing basis. In addition to the FHFA raising the LIHTC for the GSEs, the Biden administration has also announced the following goals to boost affordable housing: » Boosting the supply of manufactured housing and two- to four-unit properties by expanding financing through Freddie Mac. Along with Fannie Mae's and the Federal Housing Administration's (FHA) existing policies, these steps will enable more Americans to purchase homes, and increase the availability of rental units throughout the country. » Make more single-family homes available to individuals, families, and non-profit organizations—rather than large investors—by prioritizing homeownership and limiting the sale to large investors of certain FHA-insured and HUD-owned properties, in addition to expanding and creating exclusivity periods in which only governmental entities, owner occupants, and qualified non-profit organizations can bid on certain FHA-insured and government-owned properties. » Work with state and local governments to boost housing supply by leveraging existing Journal

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