NAAHL Calls for Improvements to Bank Capital Rules for Affordable Housing and Community Development

NAAHL, partners urge regulators to align capital requirements with risk for LIHTC and NMTC

Today, NAAHL and partner organizations sent two letters to the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) urging them to reduce the risk weight applied to two proven affordable housing and community development tools: the Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC).

These credits have a decades-long track record of strong performance, but under current bank capital regulations they are treated as riskier than their history warrants. Getting risk weights right matters: risk weights that match the risk profile of these investments would support additional investment in affordable housing and community development that would boost housing supply at a time of a well-documented supply shortage and expand economic opportunity. These adjustments would also help ensure that the recently enacted expansion and enhancements to LIHTC and the permanent authorization of NMTC, both passed in last year’s One Big Beautiful Bill Act, meet their full potential to translate into real investment on the ground.

“LIHTC and NMTC are successful public-private partnerships that attract private investment into critically needed affordable housing and economic development,” said Sarah Brundage, President and CEO of NAAHL. “Updating capital requirements to reflect the decades of strong performance of these assets could help unlock additional private support for housing and community development to meet pressing needs across the country.” 

NAAHL submitted the letter on LIHTC alongside the Affordable Housing Tax Credit Coalition, Novogradac, and 24 other national organizations. NAAHL submitted the letter on the NMTC alongside the NMTC Coalition, Novogradac, and 12 other national organizations.