U.S. Sens. Jerry Moran (R-KS), Mark Warner (D-VA), Todd Young (R-IN) and Peter Welch (D-VT) introduced a bill to clarify that government sponsored enterprises (GSEs), like Fannie Mae and Freddie Mac, are able to participate in partnerships to develop low-income housing investments.
Currently, the Internal Revenue Code says that investors partnering with Tax-Exempt Controlled Entities (TECEs) are not entitled to certain benefits. These benefits include accelerated depreciations, bonus depreciation, historic rehab tax credits, or certain energy credits that support companies offering affordable housing tax credits.
This legislation would clarify that Fannie Mae and Freddie Mac are not subject to this rule. That, in turn, would protect their participation in partnerships that are crucial for low-income housing investments.
“Housing affordability has a significant impact on rural Americans across the country,” Moran said. “By making this technical change, rural housing investors that partner with Fannie and Freddie can confidently invest in affordable housing that is desperately needed in rural communities. I encourage my colleagues to support this bill so that we can continue to improve rural America by reducing housing costs.”
In 2023, Moran and Warner were among 20 senators who urged Treasury Secretary Janet Yellen to provide written guidance that clarifies that Fannie Mae and Freddie Mac are not Tax-Exempt Controlled Entities (TECEs).
“We need an all-hands-on-deck approach to getting investments into rural communities and expanding housing options for low-income Americans,” Warner said. “I’ve been continuously raising the alarm about the commonsense fix in the Preserving Rural Housing Investments Act. We must pass this bipartisan legislation so we can unlock investments in our rural communities and cut housing costs for hardworking Virginians.”
The bill has the support of several organizations, including the nonprofit community development organization Cinnaire Lending and the National Council of State Housing Agencies.
“The Housing Credit program is essential for building and preserving rental housing in rural America—the very communities that have some of our most dire affordable housing challenges,” Stockton Williams, executive director of National Council of State Housing Agencies, said. “Senator Moran and Senator Warner’s bill will ensure Fannie Mae and Freddie Mac can continue to meet their statutory requirements to meet underserved rural housing needs in an efficient manner through the program.”