The Federal Housing Finance Agency (FHFA) announced that it is revising the affordable housing lending categories that are excluded from the multifamily lending purchase caps established in the 2015 Scorecard for Fannie Mae and Freddie Mac (the Enterprises). The 2015 Scorecard caps of $30 billion of new multifamily lending for each Enterprise will not change. However, FHFA is revising the excluded category in order to facilitate continued liquidity in the overall multifamily finance market which has increased substantially since the initial cap was set, and to reinforce FHFA’s emphasis on providing financing for affordable rental housing.
“[Freddie Mac Multifamily] appreciates and strongly supports FHFA’s decision to widen the criteria for loans excluded from the $30 billion multifamily volume cap. These changes will provide us with a greater ability to serve the needs of affordable and workforce housing across the full range of multifamily communities,” said David Brickman, executive vice president of Freddie Mac Multifamily. “The overall multifamily market has continued to experience very strong growth as demand for rental housing surges in many markets, making affordable housing more and more difficult to find. These changes will enable us to continue to serve our mission of providing liquidity, stability and affordability to the entire multifamily market.”
Changes to the affordable housing lending exclusions include the following:
- A pro rata portion of multifamily loan amounts purchased by the Enterprises in 2015 will be excluded from the caps based on the percentage of units in a property affordable to renters at 60 percent of area median income.
- In higher cost areas, the income threshold for affordability will be increased to 80 percent of area median income.
- For very high cost markets, the income threshold for affordability will be increased to 100 percent of area median income.
- Assisted living units for seniors will also be excluded from the caps as long as they are affordable at 80 percent of area median income.
- The calculation of specific loan amounts excluded from the caps for mixed income targeted affordable housing properties will also be modified.
“A key priority for FHFA is for Fannie Mae and Freddie Mac to play a strong role in supporting the financing needs of affordable rental housing,” said FHFA Director Melvin L. Watt. “By revising and clarifying these affordable housing lending categories, we expect the Enterprises to dedicate the necessary time, attention and resources to support this important part of the multifamily market.”
As with the 2014 Scorecard, the 2015 Scorecard continues to exclude from the $30 billion caps affordable housing loans, loans to small multifamily properties and loans to manufactured housing rental communities.
