LIHTC Lending Incentivizes Affordable Housing Support for Low-Income Individuals and Families in Illinois and Wisconsin

The Federal Home Loan Bank of Chicago (FHLBank Chicago) is announcing 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 multi-family housing projects. Through member banks, credit unions, insurance companies, community development financial institutions (CDFIs), and eligible housing associates, the program will 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,” said Michael Ericson, President and CEO, 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 is the latest example of FHLBank Chicago’s innovative approach to using its financial strength to support members through impactful reinvestments in their communities. LIHTC loans are highly aligned with FHLBank Chicago’s mission to provide reliable liquidity and support affordable housing.

FHLBank Chicago continues to respond to community needs, increasing its annual commitment to over $180 million for affordable housing and community development initiatives, as of end of second quarter 2024. The new LIHTC Collateral Pilot Program marks the second pilot program FHLBank Chicago announced this summer. In July, FHLBank Chicago announced the launch of its Community Impact Advance Pilot Program, which provides $50 million in interest rate subsidies to help expand affordable housing, economic development, and community partnerships. The $50 million in interest rate subsidies was fully reserved by members in just 10 days.

The LIHTC Collateral Pilot Program will be available for up to three years, from August 2024 through August 2027, with regular evaluation. For more information, visit FHLBank Chicago’s Pilot Transparency Page.

About the Federal Home Loan Bank of Chicago

The mission of the Federal Home Loan Bank of Chicago is to partner with our members in Illinois and Wisconsin to provide them competitively priced funding, a reasonable return on their investment in the Bank, and support for community investment activities. FHLBank Chicago is one of 11 Federal Home Loan Banks chartered by the U.S. Congress in 1932 to promote homeownership. Our members include banks, thrifts, credit unions, insurance companies, and community development financial institutions throughout our District. To learn more about FHLBank Chicago, please visit fhlbc.com.

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