MassHousing recently closed two multifamily preservation loans through a new partnership that provides lower interest rates on loans to owners of subsidized rental housing. The initiative is intended to give them new incentives to refinance, make capital improvements and lock in long-term affordability for lower income residents.

Under the program, the Federal Financing Bank (FFB) purchases a 100 percent participation interest in the loan. State housing finance agencies (HFAs) such as MassHousing service the loan and principal and interest payments flow through a custodian back to the FFB.

The Department of the Treasury, Department of Housing and Urban Development and HFAs like MassHousing partnered together for the program.

The first MassHousing loan was $17.6 million to Pheasant Hill Village Assoc., an affiliate of SHP Acquisitions, to refinance Pheasant Hill Village, a 200-unit Section 8 apartment community in Agawam. Part of the loan will fund capital improvements.

The second loan was for $6.8 million to Greenfield Acres LLC, an affiliate of The Congress Cos., to refinance Greenfield Acres, a 94-unit elderly housing development in Greenfield. Originally built in 1972, the property had an outstanding permanent loan that was set to mature in March 2016. Four units will be converted to fully-accessible units.

In both properties, affordable rents will be maintained for at least 20 years as a condition of the loan.

Previously, one transaction in New York had closed under the same program.