Banking and Finance Law Daily FHFA revises multifamily loan purchase caps for Fannie Mae and Freddie Mac
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Monday, September 16, 2019

FHFA revises multifamily loan purchase caps for Fannie Mae and Freddie Mac

By Colleen M. Svelnis, J.D.

FHFA has issued a revised cap structure for Fannie Mae and Freddie Mac multi-family loans purchases; new purchase caps with be $100 for each GSE.

The Federal Housing Finance Agency has revised Fannie Mae and Freddie Mac’s cap structure for multifamily businesses. The new multifamily loan purchase caps will be $100 billion for each Government Sponsored Enterprise (GSE), a combined total of $200 billion in support to the multifamily market, for the five-quarter period beginning in the fourth quarter of 2019 through the fourth quarter of 2020. The new caps apply to all multifamily business and includes no exclusions. According to FHFA Director Mark Calabria, the new multifamily caps "eliminate loopholes, provide ample support for the market without crowding out private capital, and significantly increase affordable housing support over previous levels. The Enterprises should also manage under the caps to provide consistent, stable liquidity to the market throughout the entire five-quarter period."

The FHFA also directed that at least 37.5 percent of the Enterprises' multifamily business be mission-driven, affordable housing. This new minimum of 37.5 percent is meant to assure that the Enterprises' multifamily businesses "have a strong and growing commitment to affordable housing finance," according to the agency’s release. Loans that finance energy and water efficiency improvements will be considered conventional business, unless they meet other mission-driven afford ability requirements.

The FHFA Fact Sheet describes the growth of the multifamily market, and how the Enterprise share of multifamily loan originations has expanded, putting the GSEs "in a pro-cyclical role in the multifamily market." Fannie Mae and Freddie Mac’s share of new multifamily originations increased from approximately 36 percent in 2015 to 49 percent in 2017 and, based on preliminary estimates, 42 percent in 2018. According to the Fact Sheet, the recent growth in Enterprise multifamily market share is largely attributable to the exclusion of green loans from the caps starting in 2016. By 2017, and continuing in 2018, approximately 50% of Enterprise production was excluded from the cap altogether.

Appendix A explained the Revisions to the 2019 FHFA Conservatorship Scorecard and how the FHFA will now treat mission-driven loans, including the following:

  • loans on targeted affordable housing properties;
  • loans on other affordable units;
  • loans on properties located in rural areas;
  • loans on small multifamily properties;
  • manufactured housing rental community blanket loans;
  • loans on seniors housing assisted living properties.

Companies: Fannie Mae; Freddie Mac

MainStory: TopStory DoddFrankAct FinancialStability GovernmentSponsoredEnterprises Loans Mortgages

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