GAO Releases Report on the Role of Syndicators in the Housing Credit Program

Yesterday, the U.S. Government Accountability Office (GAO) released the third in a series of four reports on the Low Income Housing Tax Credit, Low Income Housing Tax Credit: The Role of Syndicators. In its report, GAO identified 36 active syndicators as of October 2015. It worked with the accounting, tax, and advisory firm CohnReznick to survey those syndicators for data on their activities and interviewed representatives of various organizations, including NCSHA, to obtain background for the report.

The report is descriptive in nature, providing information on the characteristics of syndicators, their activity in the market between 2005 and 2014, the role they play in the industry, and factors that influence their use. The report does not include any recommendations for action.

The report considered foreclosure rates of properties in syndicators’ portfolios, finding that approximately 1 percent of properties had undergone foreclosure. HUD officials told GAO that foreclosure of multifamily developments, including Housing Credit developments, is generally rare because lenders often try to restructure loans to avoid foreclosure. The report also notes that, "syndicators conduct additional underwriting and may assist struggling properties," resulting in low foreclosure rates.

While the report does not include any negative comments about the Housing Credit program or the role syndicators play in the program, Senator Charles Grassley (R-IA), who instructed GAO to conduct the series of reports on the Housing Credit, released a statement criticizing the IRS and HUD for not independently maintaining information about syndicators. In it he states, "The fact that GAO had to rely on a third-party contractor database for syndicator information because neither IRS nor HUD maintains that information tells you that no one is minding the store."

GAO had initially intended to include its study of syndicators within its third report on Housing Credit development costs, but due to delays in finalizing its development cost research, GAO instead spun off the syndicator report as a freestanding report. Based on NCSHA’s most recent conversations with GAO, it does not expect to release the report on Housing Credit development costs until sometime next year. The first two reports in the series focused on federal oversight of the Housing Credit program (released in July 2015), and state administration of the program (released in May 2016).

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