Fannie Mae is the biggest player in the nation's secondarymortgage market. The CHFA is a state organization established toencourage the development, purchase and retention of affordablehousing in the Golden State.

As part of the complex plan, Fannie Mae sold about $274 millionworth of federally backed Section 236 mortgages to CHFA. Bypurchasing the loans, CHFA now has the opportunity to preserve theunderlying apartment buildings for affordable rental housing.

The deal is aimed at stemming the growing number of apartmentowners who are opting out of the federal subsidy program so theycan raise rents to market levels. About 43,000 affordable apartmentunits in California alone could conceivably be removed from thefederal rolls, Fannie Mae says.

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