Real Estate Report:
Freddie Mac announced a new program aimed to help keep rents affordable for working families without any federal, state or municipal subsidy. Freddie Mac’s new Mezzanine Loan pilot provides favorable pricing and additional debt capital in exchange for multifamily property owners voluntarily keeping a majority of rents at levels affordable to low- and moderate-income families, while limiting rent growth throughout the life of the loan.
The program is similar in concept to rent control, and it incentivizes rental property owners to ease rent hikes by offering owners discounted financing. With a recent report by rental listing service, RentCafé, showing that the national average rent climbed to a record high of $1409 this summer, up 2.8 percent over last year, this announcement is garnering some attention.
“The Workforce Housing and Targeted Affordable Mezzanine Loan offerings provide low-cost financing that incentivizes property owners to keep units affordable for working families, while limiting rent growth over the term of the loan,” said David Brickman, executive vice president and head of Freddie Mac Multifamily. “At a time when rents continue to price families out of markets, this initiative gives us the opportunity to test a new solution to a persistent challenge.”
Owners who choose to take part in the program, which is strictly voluntary, are required to:
- Limit rent increases on 80 percent of their units
- Agree to make at least 50 percent of their units affordable to those earning the local median income or less
- Report on rents on an annual basis to ensure compliance with the program’s rules
- Agree to a penalty fee that is assessed if owner is in violation of compliance
Locally in Worcester County, the latest reported median household income is approximately $57,000. RentCafé reported the median housing cost per month for zip code 21811 at $1196.
Lauren Bunting is an Associate Broker with Bunting Realty, Inc. in Berlin, MD.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
