The 2022 multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $78 billion each, for a combined $156 billion to support the multifamily market, according to the Federal Housing Finance Agency (FHFA).
The caps have increased from $70 billion each for the government-sponsored enterprises (GSEs) in 2021, based on FHFA’s projections of the overall growth of the multifamily originations market.
At least 50% of the GSEs’ multifamily loans are required to be used for mission-driven, affordable housing. FHFA will require that at least 25% of the multifamily business must be affordable to residents at or below 60% of the area median income (AMI). This is up from 20% in 2021.
“The increases of the multifamily loan purchase caps and higher mission-driven business requirements assure that the enterprises’ multifamily businesses have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are the most difficult to serve,” said FHFA acting director Sandra L. Thompson.
According to FHFA, it has changed certain requirements for multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard. For 2022, it will allow loans on affordable units in cost-burdened renter markets to be mission-driven. In these high-cost markets, FHFA uses a data-driven approach to designate markets in which loans on units will be affordable to cost-burdened renters with incomes up to 100% of the AMI or 120% of the AMI, depending on the market. It also will allow the mission-driven classification for loans that finance energy- or water-efficiency improvements with units affordable at or less than 60% of the AMI to be classified as mission-driven. These loans are provided through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up/Green Up Plus programs.
“FHFA's increase to Fannie Mae’s 2022 multifamily loan purchase cap will continue to strengthen our ability to provide liquidity and stability in the multifamily mortgage market and recognizes our more than 30-year history as a reliable source of multifamily mortgage capital,” said Michele Evans, executive vice president and head of multifamily at Fannie Mae. “In addition, FHFA’s focus on mission-driven, affordable multifamily housing echoes Fannie Mae’s commitment to preserving and expanding the affordable housing supply, as well as financing quality green and sustainable rental units, across the United States.”
According to Debby Jenkins, executive vice president and head of multifamily at Freddie Mac, “FHFA’s enhancements to our mission focus and 2022 volume cap increase will allow Freddie Mac to better support the multifamily market in the year to come. These changes allow us to provide more liquidity to the growing market and delve deeper into our mission to address the nationwide housing affordability crisis.”
FHFA will continue to monitor the impact of COVID-19 on the multifamily mortgage market and will update the caps and mission-driven requirements if adjustments are warranted. To prevent market disruption, if FHFA determines the actual size of the 2022 market is smaller than initially projected, it will not reduce the caps.
To expand the supply of affordable housing, FHFA also announced in September that Fannie Mae and Freddie Mac can each invest up to $850 million annually in low-income housing tax credits (LIHTCs), an increase from the previous $500 million cap.
Within the $850 million annual funding cap, any investments above $425 million in a given year are required to be in areas that have been identified by FHFA as markets that have difficulty attracting investors. This marks an increase in the amount of investments under the cap that must be made in targeted transactions that either support housing in Duty to Serve-designated rural areas, preserve affordable housing, support mixed-income housing, provide supportive housing, or meet other affordable housing objectives.
