Affordable Market Value (AMV)

Affordable market value is the sale price of a multi-family residential housing unit sold through the FDIC’s Affordable Housing Program.

Affordable market value is a tool used by the Federal Deposit Insurance Corporation (FDIC) to make housing more affordable for low-income buyers. The affordable market value of a property reserved for low-income families is lower than the appraised value of the property, as it takes into account the lower income purchase requirement, the physical condition of the property, expected operating expenses and financing options. Traditionally, the market value of a property is the amount a buyer is willing to pay, not the value placed on the property by the seller. In return for purchasing a property at a price below the fair market value, purchasers agree to make units available to low and very low-Income households at affordable rents. The rent and income restrictions are designed to assure that, for the next 40 to 50 years, the property serves families in need of affordable housing.

One of the goals of the FDIC is to assist communities with their housing needs, which led to the creation of the Affordable Housing Program (AHP). It is designed to help low- and moderate-income families purchase residential properties previously owned by failed banks. When a financial institution fails, the FDIC is charged with ensuring that the institution’s assets are sold off in a timely manner. It brings in a managing agent to take charge of operations and has asset specialists to value assets and work with asset managers to sell those assets off. The FDIC, through a network of state housing agencies, monitors and ensures compliance with the Land Use Restriction Agreements that govern the use of single and multi-family properties in the Affordable Housing Program.

The AHP is related to the Resolution Trust Corporation (RTC), which was created in response to the savings and loan crisis of the 1980s and early 1990s. The RTC was designed to help manage and dispose of assets of failed financial institutions. Because it took on some governmental responsibilities, advocates for affordable housing for low-income families wanted it to help fulfill housing needs in the areas served by failed banks. To accomplish this goal the RTC provided low-income families a right of first refusal, and organizations were allowed to make purchases if a certain proportion of a multi-family unit was reserved for low-income residents.

This policy meant that the highest bidder was not necessarily the one to wind up with the property. During the early 1990s, the average adjusted market value for a property reserved for lower-income families was two-thirds the appraised market value.