While the market for new construction of tax-credit deals remains sluggish, some affordable housing lenders are finding success focusing on preservation deals.

Many of the affordable housing industry’s largest lenders, especially those focused on new construction, struggled through 2009 with significant declines in originations. But some smaller, more nimble organizations actually saw increases last year, mainly due to an increase in refinancing volume.

Throughout 2009, Fannie Mae, Freddie Mac, and the FHA offered mid-5 percent debt thanks to a low yield on the benchmark 10-year Treasury note. While all-in rates from the government-sponsored enterprises are now around 6 percent, the FHA is still pricing immediate fundings in the low- to mid-5 percent range, as of late January.

One beneficiary of last year’s low rates was Fannie Mae lender Alliant Capital. The company more than tripled its affordable housing debt volume in 2009, closing on about $117.7 million, up from $36.8 million in 2008. Alliant saw a good clip of acquisition deals, particularly as many syndicators sold off parts of their portfolio. But much of its volume last year was in refinances of expiring tax-credit properties, preservation deals done through Fannie Mae loans.

“Alliant has been doing acquisitions and refis for 15 years, and so we were poised to take advantage of this slowdown in new construction, and the uptick in acquisitions and refis,” says Alex Pedersen, deputy chief underwriter of affordable housing for Seattle-based Alliant.

To help handle this volume increase, the company opened additional offices in 2009, in San Francisco, Anaheim, San Diego, Chicago, New York City, and Washington, D.C. Alliant is currently seeking to broaden its range of offerings with an FHA license, which it expects to receive in the second half of 2010.

Another debt shop that saw a dramatic rise last year was P/R Mortgage & Investment Corp. The Carmel, Ind.-based lender offers Fannie Mae, Freddie Mac, HUD, and USDA Rural Housing Service loans. Last year, the company closed about $145 million in affordable housing loans, up from $45 million the year before. The company said that about $60 million of that total came from seven refinancing loans of tax-credit deals completed with one borrower.

Lancaster Pollard, a prolific FHA lender, grew its organization last year as well, though its debt volume shrunk to $94.2 million in 2009, from $104.6 million the year before. About $67 million of its 2009 total was in refinances using the FHA’s 223(f) program.

The Columbus, Ohio-based company opened its first West Coast office in Los Angeles, and brought on 12 more full-time employees. The company also hopes to open an office in the Pacific Northwest sometime in the next 18 months.

“Since about 2004, we’ve been covering the United States with transactions and following national developers, and so we’re really trying to become more saturated in those markets and expand our footprint,” says Nick Gesue, a senior vice president and director at Lancaster Pollard.

But Lancaster Pollard and other lenders have seen a new source of competition lately: housing finance agencies. While it varies state-by-state, many HFAs are now offering first mortgages with 40-year terms and 4.5 percent interest rates—unbeatable in the private sector. These programs are often backed by stimulus capital, so they may be short-lived.

“There were some states who were pretty aggressively structuring debt offerings to try and get some affordable housing deals done,” says Thomas Booher, executive vice president and agency lending manager at the multifamily division of Pittsburgh-based PNC Real Estate. “It’ll be interesting to see if those actually continue this year.”