U.S. Senator Maria Cantwell (D-WA) held a housing summit at Bellevue City Hall yesterday to highlight her leadership in modernizing the low-income tax credit program. There were a couple of interesting panel discussions, one on development of low income housing and one on the financing of low income housing projects.
In a previous post, I mentioned the fact that the credit crunch in our country was one of the factors that prevented people from being able to take advantage of falling home prices. What I neglected to mention – and what was touched on yesterday – was that the credit crunch also inhibits housing affordability because developers can’t finance their projects as easily.
I shouldn’t have been surprised to learn from one of the panels that two of the biggest sources of financing for low-income housing development are good ol’ Fannie Mae and Freddie Mac. In an effort to keep from totally going over the edge, one of the things they have done is stop participating in the low-income tax credit program, which apparently has removed about 50% of the available equity from the system.
The recent modernization of this program – passed as part of the recent overarching housing bill – counteracts that somewhat, as well as the creation of the new National Housing Trust Fund (although it won’t actually start funding for a few years). But again, the continuing credit crunch is going to remain another impediment to ensuring that people in the Puget Sound and elsewhere have a dependable roof over their heads.