Partners (Winter 1996)

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The ABCs of Subsidy Providers

The list of subsidy providers and available programs provided is a small sampling of some of the options from which community development lenders may choose. It is intended to be representative -- neither an exhaustive list nor an endorsement of particular enhancement providers. Any exclusions are merely due to space considerations.

Low-income Housing Tax Credit (LIHTC) - a dollar for dollar tax credit that reduces federal income tax liability for investors in low- to moderate-income rental housing developments.

HOME Program (HOME) - a federal grant program provided to local governments for the development of affordable housing; usually leveraged with private funding sources.

Section 8 - a federal rent supplement program for low-income renters that pays the property owner the difference between the amount the tenant pays for rent and the market or contract amount.

Rural Housing Loans - direct loans, guaranteed loans, and credit towards interest rate buy-downs available through the U.S. Department of Agriculture's Rural Development program for housing in rural areas.

Enterprise Communities(EC) / Empowerment Zones (EZ) - federal grant programs administered through the Department of Housing and Urban Development.

Community Development Block Grants (CDBG) - grants allocated to state (non-entitlement) and local (entitlement) jurisdictions to engage in a variety of community development activities.

Affordable Housing Program (AHP) - a Federal Home Loan Bank program that provides grants or loans to its member institutions, which then make the funds available to grantees or borrowers for housing development activity.

Community Investment Program (CIP) - a Federal Home Loan Bank program that provides advance funds to its member banks who in turn provide maturity-linked, subsidized loan assistance for a variety of housing and small business development activities.

Community Development Financial Institution (CDFI) - a financial institution established with the sole purpose of promoting community and economic development.

Bureau of Indian Affairs (BIA) - provides management, technical assistance, and loan guarantees for housing developments owned or occupied by Native Americans on trust land or in Indian or Alaska Native areas.

Historic Preservation Tax Credits - a program administered by the U.S. Department of the Interior that provides tax credits for rehabilitation of historic structures to property owners and long-term lessees.

Veterans Administration(VA) / Federal Housing Administration (FHA) - insures loans made by private lenders that make lower interest rate or more favorable term loans to borrowers.

Small Business Administration (SBA) - offers a variety of special loan and guarantee programs for small business start-up and expansion efforts.

Local Initiatives Support Corporation (LISC) - a large, national, non-profit community development finance intermediary that also administers LIMAC, a secondary market provider that invests in loans made by LISC non-profit affiliates.

Neighborhood Reinvestment Corporation (NRC) - a federally chartered community development finance and technical assistance intermediary that works with non-profit community development organizations through its NeighborWorks network. NRC also operates a secondary market provider, NHSA, that invests in home mortgages made by NeighborWorks affiliates.

Federal Home Loan Mortgage Corporation (Freddie Mac) - secondary market provider that purchases mortgages and resells them in the form of guaranteed mortgage securities.

Federal Agricultural Mortgage Corporation (Farmer Mac) - provides a secondary market for agricultural real estate and rural housing loans by allowing the loans to be packaged and sold into loan pools that serve as collateral for investors.

Federal National Mortgage Association (FannieMae/FNMA) - a publicly owned secondary market provider that is chartered by Congress to invest in home mortgages originated by private lending institutions.

Government National Mortgage Association (GinnieMae/GNMA) - provides a secondary market for private lenders by purchasing mortgages generated by subsidized programs to support the construction and purchase of low- to moderate-income housing.

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