FHFA releases 2019 multifamily lending caps for Fannie Mae, Freddie Mac

And 2 changes to multifamily origination excluded categories

The Federal Housing Finance Agency announced its new 2019 multifamily lending caps for Fannie Mae and Freddie Mac on Tuesday.

The caps, which are based on the FHFA’s projections for the overall size of the 2019 multifamily originations market, will be set at $35 billion for each enterprise, the same as the year before.

The agency explained it expects multifamily originations to remain flat compared to 2018. In setting the caps, FHFA also considers multifamily market estimates developed by industry participants and analysts.

Previously, the FHFA would review its estimates for the multifamily market size each quarter and adjust the caps if necessary. However, if the FHFA determines the market is smaller that it projected it will not reduce the caps.

The FHFA announced the caps Tuesday in order to all stakeholders enough time to plan for their 2019 business. The agency will provide more information on the role the GSEs will play in the multifamily market when it releases its 2019 Scorecard.

The multifamily lending caps are intended to further FHFA’s strategic goal that the enterprises provide liquidity for the multifamily market without impeding the participation of private capital. Because market support for affordable multifamily housing has historically been limited, FHFA will continue to exclude from the 2019 caps certain loans in the affordable and underserved market segments. 

For 2019, FHFA is making the following changes to these excluded categories:

Loans to finance energy or water efficiency improvements: The FHFA is increasing the requirements for exclusion from the multifamily cap loans that finance energy or water efficiency improvements through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up/Green Up Plus programs.  To qualify for exclusion from the cap, multifamily loans that finance energy or water efficiency improvements must project a minimum 30% reduction in whole property energy and water consumption and a minimum of 15% of the reduction must be in energy consumption. The FHFA is also adding a data collection requirement for all excluded Green Rewards and Green Up/Green Up Plus loans, which requires engagement of a third-party data collection firm prior to closing. The consumption reduction threshold ensures that the benefits from green renovations are passed through to the tenants, while the added data requirement allows FHFA to assess the efficacy of the Enterprises’ green improvements programs on an ongoing basis. ​

Loans on affordable units in cost-burdened renter markets: To address the critical shortages of affordable rental housing in specific markets, the FHFA developed a data-driven approach it will follow to designate markets in which units affordable to cost-burdened renters at certain area median income levels will be excluded from the multifamily cap on a pro-rata basis. This data-driven process will ensure that exclusions from the cap are focused on markets where renters are most cost-burdened and will result in less variation in market designations over time and offer greater stability to the multifamily market.

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