Fannie Mae is starting to offer pricing incentives to multifamily borrowers if they accept Department of Housing and Urban Development vouchers from tenants.
The incentives for property owners, which will lower the rate on apartment building mortgages initially by 10 to 15 basis points, are currently available for certain North Carolina and Texas properties. Landlords must accept Housing Choice vouchers and offer fair market rents on at least 20% of their units, some of which must be large enough to accommodate families.
The move could encourage expanded use of a program targeting some underserved demographics that the Biden administration, HUD and the GSEs have sought to reach in efforts to make housing more equitable and affordable. A high share of voucher users are Black families, and households headed by women, elderly or disabled people. But around 30% of tenants with vouchers end up returning them because they fail to find units within a certain time frame, according to Fannie Mae.
“We want to make sure renters with vouchers benefit from this [initiative],” Michele Evans, head of multifamily at Fannie Mae, said in an interview. “What we’re hoping to get out of it is to increase the number of properties that accept vouchers in these markets and get a greater understanding of some of the pain points that the landlord or property owner has and the renters have as well.”
A limited number of jurisdictions require property owners to accept vouchers, which public housing agencies administer locally. But roughly half of all states, including North Carolina and Texas, lack such requirements, according to Fannie Mae’s analysis of multiple data sources.
The financing incentives for qualifying property owners that accept the vouchers will be available for 12 months and could be expanded to other jurisdictions.
Vouchers are used to subsidize housing costs and designed to help recipients spend roughly 30% of their income on rent.