CHICAGO — The Federal Home Loan Bank of Chicago (FHLBank Chicago) has launched the Low-Income Housing Tax Credit (LIHTC) Collateral Pilot Program, which provides members with increased lendable value on their pledged collateral for up to $300 million of qualifying mortgage loans on LIHTC multifamily projects. Through member banks, credit unions, insurance companies, community development financial institutions (CDFIs) and eligible housing associates, the program aims to amplify and incentivize lending in support of affordable housing for low-income individuals and families. While all FHLBank Chicago members are eligible to participate, up to $200 million of the LIHTC Collateral Pilot Program funding will be reserved for members with assets under $1.46 billion, including CDFIs.
The LIHTC program is a key federal tax policy designed to incentivize private investment in the development and preservation of affordable rental housing in the United States for lower-income households. Loans needed to fund LIHTC projects are often sold to investors for securitization, but projects meeting local or specialized needs may have smaller loan amounts that can be challenging and more expensive to finance, since the lender may have to hold the loans in their portfolio.
“Our members are working to address needs and gaps in affordable housing to serve and improve their communities,” says Michael Ericson, president and CEO of FHLBank Chicago. “Our new LIHTC Collateral Pilot Program enhances the value of this important collateral asset class to increase available funding for LIHTC loans in our district, provides much-needed liquidity for affordable housing to benefit low-income individuals and families, and delivers on our mission.”
The LIHTC Collateral Pilot Program will be available for up to three years through August 2027.