Lenders' affordable taboo lessened.

The taboo that has encompassed the affordable housing market for years has been that lenders simply can't make money there.

But some lenders found that to be less true in 1993. and the more innovative ones-like Countrywide Funding - have found gold in the nationwide affordable housing market with the help of Fannie Mae and Freddie Mac, a lead likely to be copied in 1994.

Countrywide loosened its underwriting guidelines for its house America program in May 1992, then used its huge mass-marketing skills to attract low- and moderate-income and central city borrowers. Other large lenders like PNC Mortgage and Norwest are also finding success in affordable programs.

Programs like the Fannie Neighbors, which employs flexible underwriting guidelines such as 33% and 38% housing-to-income and debt-to-income ratios respectively, have created many opportunities for lenders. Freddie's Affordable Cold program is similar.

But while programs for the low-and moderate-income home buyers are becoming plentiful, Fannie and Freddie are finding it more difficult to meet their central city lending goals, which probably won't be met without some growth in the multifamily arena.

Virtually dead since the thrift exists, the nationwide multifamily market has shown some signs of life over the last couple months and a recovery could be on the way in 1994.

The permanent reauthorization of the low income housing tax credit leads the way for a renewed interest in the market.

The credit takes some of the risk out of the deals because it provides an additional source of equity that lowers the loan-to-value ratio. In return, the lender can provide the loan at a lower interest rate.

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