Copyright: Bennian
The Federal Housing Finance Agency (FHFA), the regulator, of Fannie Mae and Freddie Mac (the Enterprises) today issued the multifamily production caps for 2021. Each Enterprise will be allowed to purchase up to $70 billion of multifamily loans during 2021, for a total of $140 billion, subject to a requirement that 50% of all loans purchased are mission driven, affordable housing. The announcement’s Appendix A: Multifamily Definitions also aligns the definition of affordable loans more closely with FHFA’s Housing Goals and Duty to Serve programs.
Mission-driven, affordable housing is generally defined as housing affordable for residents at 80 percent of area median income (AMI) or below, with special provisions for rural housing and for manufactured housing communities.
For rural housing, credits a loan as mission-driven if the property is in a Duty to Serve-designated rural area and affordable to residents at 100 percent of AMI or below.
This new definition of mission-driven affordable housing loans removes the current approach that has four tiers defining affordability ranging from 60 to 120 % of AMI. The new definition includes a sub-group that requires that 20% of all purchases are at or below 60% of AMI. Most recently in 2019, 32% of Fannie Mae multifamily loan purchases were at or below 60% of AMI, while 35% of Freddie Mac loan purchases were at our below 60% of AMI.
Estimating the size of the market in 2021 was especially challenging this year for FHFA and they are committed to monitor the market to ensure the flow of capital to meet mission driven loan needs is met.
“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,” said FHFA Director Mark Calabria.
NMHC and NAA will closely monitor the multifamily market conditions to provide timely information to FHFA to ensure the flow of capital to the industry is not disrupted.
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