The 2023 multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion each for a combined $150 billion to support the multifamily market, announced the Federal Housing Finance Agency (FHFA). The caps are down from the combined $156 billion for 2022. According to FHFA, the 2023 caps reflect an anticipated contraction of the multifamily originations market next year.
With a focus on affordable housing and underserved markets, FHFA will require that at least 50% of the government-sponsored enterprises’ (GSEs’) multifamily business be mission-driven affordable housing. In addition, FHFA has revised its requirements for mission-driven affordable housing. One change to reduce inconsistencies with FHFA’s Housing Goals regulation has been the removal of the requirement that 25% of the GSEs’ multifamily business be affordable at or less than 60% of the area median income (AMI).
A new category for 2023 has been created to focus on the preservation of affordability in workforce housing. This will encourage the financing of loans on properties with rent or income restrictions affordable at levels that meet a market’s needs and is intended to support households living closer to jobs, hospitals, and schools.
“The 2023 multifamily loan caps, coupled with a new mission-driven category for workforce housing properties, will continue to ensure that the enterprises have a strong commitment to addressing the need for affordable housing,” said director Sandra L. Thompson. “The new workforce housing category will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods of time.”
For 2023, FHFA also will allow loans to finance energy- and water-efficiency improvements for units affordable at or less than 80% of the AMI to be classified as mission-driven; this is up from 60% of the AMI in 2022. Loans on seniors housing and small multifamily properties with five to 50 units will now be included in the “other affordable” mission-driven category; according to FHFA, this change streamlines the mission-driven definition but maintains the same affordability focus as in 2022.
FHFA also notes that it will monitor market conditions and may update the multifamily cap and mission-driven minimum requirements if warranted. If the 2023 market is smaller than projected, the caps will not be reduced.
“Given current market conditions and the expected decline in the multifamily originations market, FHFA’s slight decrease in next year’s caps is appropriate and ensures a level playing field across various capital sources,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA). “MBA commends FHFA for its continued commitment to affordable rental housing, including workforce housing, and for providing stable liquidity to the marketplace. We also appreciate FHFA’s flexibility should the caps need to be increased, and its decision to streamline certain mission-driven requirements.”