On November 6, the Federal Housing Finance Agency (FHFA) released its 2019 multifamily lending caps for the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac. Each of the firms’ multifamily business will be capped at $35 billion next year, mirroring allocations to each GSE in 2018.
The lending caps were originally designed to encourage participation of private capital in the multifamily housing finance market while maintaining the GSEs’ support for multifamily lending, as established in FHFA’s Strategic Plan for Fiscal Years 2015-2019. These specific caps are determined using quarterly projections of the size of the entire multifamily mortgage market submitted to FHFA from each of the GSEs. FHFA also considers estimates from industry participants and experts. This year, the agency anticipates little growth in the GSEs’ multifamily markets and therefore did not increase the caps from 2018. FHFA will continue to review its multifamily market projections on a quarterly basis for adjustment if necessary; however, FHFA will not reduce the GSEs’ lending caps in the event that the multifamily market is smaller than anticipated.
As in previous years, FHFA will exclude certain multifamily loans that support affordable housing and housing in underserved markets. FHFA will enact two adjustments to the list of excluded activities for 2019. Specifically, the agency will require that loans used to finance energy or water efficiency improvement project a minimum 30 percent reduction in whole property energy and water consumption, with a minimum of 15 percent of the reduction in energy consumption, to be excluded from the multifamily lending cap. FHFA will also start utilizing a data-driven approach to designate markets in which units affordable to cost-burdened renters at certain area median income (AMI) levels will be excluded from the multifamily cap on a pro-rata basis.
Additional affordable housing activities that are excluded from the volume cap include:
- Loans to properties that include government-imposed affordability restrictions
- Loans to properties in rural areas with units affordable to borrowers earning 80 percent of AMI or below
- Blanket loans to manufactured housing rental communities that are secured by the land and the rental pads
- Loans on senior-housing assisted living properties
FHFA’s 2019 Scorecard will provide additional information on the multifamily lending caps.