The Federal Housing Finance Agency (FHFA) issued a final rule for Fannie Mae and Freddie Mac that establishes the benchmark levels for their multifamily housing goals for 2023 and 2024 using a new percentage-based methodology. The new housing goals ensure that the Agencies “responsibly promote equitable access to affordable housing reaching low- and very low-income families in multifamily rental properties across the country,” which will particularly benefit small- to medium-sized properties across the U.S.
“The multifamily housing goals are one method FHFA employs to ensure Fannie Mae and Freddie Mac remain focused on affordable segments of the market, consistent with FHFA’s statutory duty to promote affordability nationwide,” said FHFA Director Sandra L. Thompson. “The new methodology will make the multifamily housing goals more responsive to market conditions and better position Fannie Mae and Freddie Mac to fulfill their affordable housing mission requirements each year.”
The final rule amends the existing regulation to establish benchmark levels for the multifamily housing goals for 2023 and 2024 based on the percentage of affordable units in multifamily properties financed by mortgages purchased by Fannie Mae and Freddie Mac each year.
“FHFA’s efforts show a re-emerging support for the small balance multifamily market, which, as the FHFA has emphasized, is historically challenging to size and monitor,” said Rick Wolf, Head of Small Loans Production at Greystone. “The small multifamily benchmark was increased from 2% in the initial proposed rule to 2.5% in the final rule. We appreciate this action from the FHFA and the continued support from the Agencies to ensure smaller markets and rental properties are able to access the benefits of their financing solutions.”
Finally, FHFA has updated their list of cost burdened and very cost burdened markets which qualify for affordability. The cost burdened markets at 100% Area Median Income (AMI) include 13 counties across California, Illinois, New York, New Jersey, Maryland, Washington and Washington, D.C. Very cost burdened markets include 34 counties across a number of states including Florida, Massachusetts, Vermont, Connecticut, Pennsylvania, New York, New Jersey, California, and Rhode Island.
“These 100% and 120% AMI markets are now included in the definition of ‘mission driven’ and should help the Agencies provide more competitive pricing for this segment of the business,” adds Wolf.