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Proven Track Record
from A Guide to LIHTC
by MHEGINC
The Housing Credit is “widely regarded as the most successful housing production and preservation program in the nation’s history,” according to a 2010 report issued by Harvard’s Joint Center for Housing Studies. A study of the program recently issued by the accounting firm CohnReznick reports the annualized foreclosure rate for Housing Credits properties is only 0.57%, far below the rate for the overall multifamily rental housing asset class. That success is the result of numerous aspects of the Housing Credit program:
• Housing Credits are awarded only to those developments that best meet the housing needs of the State. Only the strongest applications receive credits. This competitive process encourages developers to design financially viable properties that offer a safe, decent and affordable place to live combined with practical amenities such as computer labs and free credit counseling classes.
• Housing Credits are subject to recapture for 15 years. Recapture is most frequently triggered by foreclosure or the failure to maintain the rent-restrictions and income-restrictions applicable to the units. MHEG and the Investment Funds obviously want to avoid any recapture of the Housing Credits. Each Housing Credit property is carefully monitored by MHEG to ensure it complies with the affordability restrictions. Each property is also backstopped by property-level and Fund-level reserves, providing a strong safety net in the event of unforeseen market changes. MHEG has had zero foreclosures and zero loss of credits.
• This public-private partnership structure, and the corresponding involvement of investors and MHEG, results in the imposition of private-sector discipline that is absent from many other federal housing production programs.
The Housing Credit is an incredibly valuable tool. It creates safe, decent and affordable homes. The properties it finances revitalize the neighborhoods in which they are located. It creates jobs and opportunities for our state and local communities. And it’s all privately built, operated and managed.