This letter summarizes our recent response to a HUD proposal to engage CDFIs on preserving small, unsubsidized rental projects. “Naturally affordable” multifamily properties of less than 50 units account for a much greater proportion of the affordable housing stock than government-assisted housing. For a mechanism, HUD proposed that GNMA-servicer-certified CDFIs would provide permanent debt for the acquisition and rehab the properties. HUD would provide a 50% risk share. This mirrors an existing but underutilized HFA bond-based  risk sharing program.

While we think the idea has considerable merit, there are many challenges to overcome. For example, CDFI experience and capital are in the short term lending arena, whereas HUD is looking for long term lenders. In the attached letter, a collaboration between Mercy Housing and other mission driven CDFIs, we suggested reasonable standards for CDFIs to meet and ways to build the existing HFA bond program through CDFI participation. We will update you as this policy proposal evolves. Learn more…