FHFA Holds GSE Multifamily Lending Caps Steady

Fannie Mae and Freddie Mac multifamily lending caps will hold steady at $35 billion in 2019, the Federal Housing Finance Agency announced yesterday.

Last November FHFA dropped the each enterprise’s multifamily purchase volume limit to $35 billion for 2018, down from 2017’s $36.5 billion limit per enterprise. FHFA changes the caps annually based on its projections for the overall size of the following year’s multifamily finance market, which the agency said it expects will be relatively flat compared to this year.

“As in prior years, FHFA will review its estimates of the multifamily loan origination market size on a quarterly basis, including consultation with industry stakeholders and the enterprises, and will adjust the caps if necessary,” FHFA said. But to prevent market disruption, FHFA noted it will not reduce the caps if it determines the actual size of the 2019 market is smaller than initially projected.

FHFA will share more details soon when it releases its 2019 Scorecard for Fannie Mae, Freddie Mac and Common Securitization Solutions, which explains the role FHFA expects the enterprises to play in the multifamily market. “[But] FHFA announced the 2019 caps today to maintain continuity in the multifamily market and to provide all stakeholders adequate time to plan for their 2019 business,” FHFA said.

The annual multifamily lending caps support FHFA’s goal that the enterprises provide adequate liquidity to the multifamily market without crowding out private capital participation.

Because market support for affordable multifamily housing has been limited in the past, FHFA excludes certain loans in the affordable and underserved market segments from the 2019 caps. For next year, FHFA made the following changes to these excluded categories:
–Loans to finance energy- or water-efficiency improvements. FHFA increased the requirements for exclusion from the multifamily cap loans that finance energy- or water-efficiency improvements through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up/Green Up Plus programs.
–Loans on affordable units in cost-burdened renter markets. To address shortages of affordable rental housing in specific markets, FHFA will designate certain markets as excluded from the multifamily cap. The agency said this should ensure exclusions from the cap are in markets where renters are most cost-burdened.