The Federal Housing Finance Agency (FHFA) announced the 2021 multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $70 billion each, or a combined $140 billion for the calendar year. In a change from the prior year, FHFA said at least 50 percent of the GSE multifamily loans are required to be used for affordable housing (an increase from 37.5 percent in 2020). Consistent with the 2020 cap structure, the new caps also apply to all multifamily business with no exclusions.
FHFA Director Mark Calabria noted, “Multifamily housing is a critical component of the nation’s housing supply and especially of its affordable housing stock. As we continue to address the shortage of affordable housing, especially amid the COVID crisis, FHFA will keep a close eye on the multifamily caps to ensure that they are sufficient and serve to increase the supply of affordable housing but do not crowd out private capital.”
More Focus on Affordability
In the 2021 caps, FHFA also requires at least 20 percent of the GSEs’ multifamily business be affordable to residents at 60 percent area median income (AMI) or below. This new minimum share of business affordable to 60 percent of AMI households assures that the GSEs’ multifamily businesses have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are most difficult to serve, FHFA said.
What Qualifies as Mission-Driven Housing?
FHFA also announced changes to simplify the multifamily definitions of mission-driven, affordable housing in Appendix A and to better align the definitions with those used by FHFA’s Duty to Serve (DTS) and Housing Goals programs. The definition of mission-driven, affordable housing is now housing that is affordable for residents at 80 percent of AMI or below, with special provisions for rural housing and for manufactured housing communities (MHC).
To align with the Duty to Serve regulation and to ensure continued support for rural communities, a loan is classified as mission-driven, affordable housing if the property is in a DTS-designated rural area and affordable to residents at 100 percent of AMI or below. MHC loans are classified as mission-driven, affordable housing if they also receive DTS credit. MHCs must meet affordability requirements, and either is resident/government/nonprofit-owned or adopts the tenant pad lease protections included in the DTS regulation.
“It is clear from the increased focus on affordable housing in the 2021 FHFA caps that this segment of the market is a primary focus for the housing regulator, and we are excited to help support this mission in 2021,” said Chip Hudson, co-head of Greystone’s Agency (Fannie Mae & Freddie Mac) lending group. “FHFA’s efforts closely align with Greystone’s own DNA, as we’ve had lending teams focused on supporting the <60 percent and <80 percent AMI affordable segments for many years and our consistent showing as a top multifamily affordable lender illustrates this commitment. We have been contributing to the GSEs’ mission-driven business for decades through our Agency lending platform, as well as with Greystone affiliates in affordable investment sales, management, development, and preservation.”
For more information, click here for the FHFA Fact Sheet on 2021 Loan Purchase Caps.