A Closer Look at FHFA’s Guidance for Multifamily

FHFA Director Mark Calabria announced a change in the purchase caps for Fannie Mae and Freddie Mac’s multifamily businesses during NMHC’s Fall Meeting on September 13. The announcement provided some relief to markets that were roiled by a pullback in loan purchases by the GSEs during a time when interest rates fell and produced a sharp increase in loan demand. With the surge in demand for multifamily debt expected to continue into 2020, the multifamily market is evaluating how the purchase caps will influence debt availability. The chart below provides a closer look at the caps and how they could provide capacity in the remainder of 2019 and for all of 2020.

	2018	2019	2019-2020	Commentary
Production Cap	$35b each GSE	$35b each GSE	$100b each GSE	The $100b is a hard cap, no exclusions and covers 5 quarters. The cap in 2018, and initially in 2019, had multiple exclusions resulting in total loan purchases of $143b (both GSEs combined) over 4 quarters. The new cap includes the 4th quarter of 2019 and will count towards the $100b leaving approximately $75-80b remaining for all of 2020.  Market size is estimated to be $390b resulting in a market share of approximately 41% for 2020.
Time period covered by the cap	Jan 1- Dec 31	Jan 1- Dec 31	Oct 1, 2019- Dec 31, 2020, overrides 2019 guidelines for the 4th quarter	New cap covers 5 quarters.
Loan purchases exclusions that don’t count toward the cap	Unlimited amount	Unlimited amount	No exclusions every loan purchased counts towards the cap	New guidelines eliminate the idea of exclusions.
Affordability guidelines	As defined in Appendix A in Scorecard	As defined in Appendix A in Scorecard	As defined in App A in 2019 Scorecard, with green loans removed	The loans qualifying as affordable no longer include green loans as of October 1.  All other definitions for affordable loans in App A for the new cap remain unchanged.
Affordable loan requirements	33%	33%	37.5%	Affordable loan purchases must equal or exceed 37.5% of the $100b.

Dave Borsos dborsos@nmhc.org

Bernard Fulton bfulton@nmhc.org

A Closer Look at FHFA’s Guidance for Multifamily

September 27, 2019

Staff Resource

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