2017 marked a record year for Fannie Mae, which closed the highest volume in the history of its Delegated Underwriting and Servicing (DUS) program. The government-sponsored enterprise provided over $67 billion in financing and supported over 750,000 units of multifamily housing.
“As we look back to 2017, we had a great year. It was a record year for us,” says Bob Simpson, vice president of affordable and green financing at Fannie Mae Multifamily.
Its overall production for affordable housing was also up in 2017, totaling $6.8 billion. That included $5.4 billion in multifamily affordable housing for rent-restricted properties and properties receiving other federal and state subsidies, a 26% increase from $4.3 billion in 2016, and $1.4 billion for properties with rent restrictions between 60% and 80% of the area median income (AMI), an 8% increase from the previous year’s $1.3 billion.
The top five DUS producers for Fannie Mae’s Multifamily Affordable Housing included:1. Wells Fargo
2. Walker & Dunlop
3. JLL Capital Markets
4. Pillar Multifamily, a division of SunTrust Bank
5. KeyBank Real Estate Capital
“2017 was the year we got back into the bond business full on, especially using the MBS Tax-Exempt Bond (MTEB) product,” says Simpson.
Fannie Mae is using its MBS execution for collateral for bonds. The pass-through structure of principal and interest is attractive to bond investors and increases the investor pool.
Looking ahead to this year, Simpson says he believes the size of the market will be similar to 2017.
Asked if tax reform will have a significant impact, Simpson adds, “Our job is to provide liquidity in markets at all times. Our mission remains the same. We will be open for business in the market providing liquidity.”
One area that Fannie Mae will focus on is its Healthy Housing Rewards initiative.
“Not only do we have an obligation to provide liquidity, but to make sure that liquidity is impactful for our residents. Our Healthy Housing Rewards embodies that,” says Simpson. “Our platform of product incentives is designed to do that. It encourages borrowers to incorporate healthy design features and services to improve the health of the residents.”
Launched last year, the first phase of the initiative focuses on providing a 15 basis point interest-rate reduction when buildings are certified for healthy design. Projects must meet the minimum certification of the Fitwel Certification System, which is operated by the Center for Active Design, and include at least 60% of units serving tenants who are at or below 60% of the AMI.
Edgewood Court Apartments in Atlanta is the first property to qualify for Fannie Mae’s Healthy Housing Rewards. Jonathan Rose Cos., in partnership with Columbia Residential, recently acquired the development and plans to redevelop it with energy conservation and sustainability measures, a new community center with a fitness center and a computer lab, ADA-accessible units, a community garden, and a playground.
In addition, Fannie Mae introduced a new product enhancement focused on resident services in January as part of its Healthy Housing Rewards. Its Enhanced Resident Services provides a lower borrowing rate for multifamily owners to provide services that address residents’ needs, such as health and wellness programs, after-school programming, job training, and food access.
Borrowers can save between $15,000 and $75,000 per year, which can then be used to offset the costs for resident services for the life of the loan.
The Enhanced Resident Services will be implemented with Stewards of Affordable Housing for the Future (SAHF), a collaborative of 13 nonprofit affordable housing providers. SAHF offers initial and ongoing compliance certifications for both the borrower and the affordable housing property providing enhanced services.
The multifamily properties seeking the pricing incentive must have at least 60% of the units set aside for residents earning at or below 60% of the AMI.
“If you have a stable and healthy resident base, you will have a stable property,” adds Simpson.