Credit Crunch Stalls Affordable Housing

Tougher Federal Housing Administration standards and falling investor interest in the federal Low Income Housing Tax Credit program has stalled construction of affordable housing. And even when it is built or rehabilitated, it's become difficult for potential buyers to get financing.

"This is a national tragedy," said Judith A. Kennedy, president and chief executive of the National Association of Affordable Housing Lenders.

Affordable-housing giant Enterprise Community Partners and other nonprofit community development leaders have been lobbying Congress to change tax rules to broaden the appeal of the tax credits.

Sandy Marenberg, a real estate practitioner who owns Marenberg Enterprises, has found it particularly frustrating that he’s unable to find buyers able to qualify for loans to buy energy-efficient properties selling for about half their cost to build.

"The pendulum's gone from giving loans to everybody, whether they deserve it or not, to only giving loans to the overqualified. The folks in between are getting turned down, and many of them would be fine home owners," he said.

Source: The Baltimore Sun, Jamie Smith Hopkins (09/28/2009)