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Friday, October 31, 2014

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Cascade: No. 60, Winter 2005

Fannie Mae's American Communities Fund Supports Intermediaries

Fannie Mae’s American Communities Fund® (ACF), which was established in 1996, provides loans and equity to for-sale and rental housing developments to increase the supply of affordable housing and to revitalize communities. ACF works with nonprofit and for-profit developers, local lenders, public entities, and community development intermediaries to achieve its mission. To maximize the impact it has on communities, ACF concentrates resources in targeted neighborhoods with established revitalization plans.

ACF and Fannie Mae’s local community business centers (CBCs) are part of the newly formed American Communities Group. Diane Laughlin, community development business manager with Fannie Mae in Philadelphia, said that CBC specialists are “our eyes and ears on the ground in the community,” and they identify different ways that Fannie Mae can be of assistance to targeted communities. The CBCs work with business managers assigned to their specific geographies to structure deals, which are underwritten in Fannie Mae regional offices. CBCs are located throughout the country, including Wilkes-Barre, Pennsylvania; Wilmington, Delaware; and New Brunswick, New Jersey.

ACF loans are typically provided at variable interest rates, Laughlin said. In 2004, ACF invested $6.3 billion in bonds in conjunction with housing finance and public housing authorities, $482 million in loans, and $238 million of equity in multifamily and single-family housing developments.

ACF is increasing its financing to qualified intermediaries, which will in turn provide financing to borrowers with qualifying projects. The intermediaries underwrite according to agreed-upon criteria, and loans are made on a full recourse basis to the intermediary, Laughlin said. In one of its first such loans in this region, ACF closed a $15 million loan in September 2005 to The Reinvestment Fund.

As part of the plan to target selected geographic areas, ACF expects to work with neighborhood development partners, including nonprofit housing providers and local lenders, to assist in project-based financing that contributes to the project’s overall feasibility. ACF financing will include both debt and equity products provided directly or through its lender and equity fund partners.

ACF also participates in loans of large construction lenders. The participations help offset risk for the lenders and expand their lending capacity, Laughlin said.

ACF assistance in the Third Federal Reserve District has included an early-stage loan for Ships Tavern, a major housing-retail development in Wilmington, Delaware; a $2 million loan to the City of Wilmington for a program to stabilize three neighborhoods; and two lines of credit to the Delaware State Housing Authority for construction and rehabilitation of 476 low- and moderate-income units.

Elsewhere in the country, one notable example of how ACF’s assistance can play a major role in a community revitalization effort is in New York City, where ACF participated in a $12.8 million construction loan with Fleet Bank (now Bank of America) for the construction of a 129-unit condominium building in Harlem with 30,000 square feet of commercial space on the ground floor.

For information, contact Diane Laughlin at (215) 575-1760 or diane_laughlin@fanniemae.com; www.fanniemae.com. For information on CBCs, contact the respective offices. In Wilkes-Barre, PA, contact Joseph Terrana at (570) 830-4360 or joseph_terrana@fanniemae.com. In Wilmington, DE, contact Dawn Poczynek-Holdridge at (302) 429-2900 or dawn_l_poczynek-holdridge@fanniemae.com. In New Brunswick, NJ, contact Merilyn Rovira at (732) 447-1884 or merilyn_rovira@fanniemae.com.