Freddie Mac has launched a new product involving the direct purchase of tax-exempt loans. The use of tax-exempt financing in LIHTC transactions is commonplace, and frequently involves direct purchase of the bonds rather than public offering, which is seen as a more efficient and less costly way to combine tax-exempt bonds and LIHTC financing.
Freddie Mac, however, is a new player as a direct bond purchaser. The first Freddie loan under this program was originated by Walker & Dunlop, which structured the loan as a acquisition and rehabilitation loan with a 16 year fixed rate term and 35 year amortization. The financing will preserve a 417-unit senior community in Dayton, Ohio, being developed by Millennia Housing.
Fannie executives have indicated that they plan to close several loans of this type by the end of 2014.