FHFA Sets $70 Billion 2021 GSE Multifamily Loan Purchase Caps

The Federal Housing Finance Agency on Tuesday announced 2021 multifamily loan purchase caps for Fannie Mae and Freddie Mac at $70 billion for each Enterprise, totaling $140 billion in support to the multifamily market.

FHFA said at least 50 percent of the government-sponsored enterprises’ multifamily loans must be used for affordable housing. Additionally, for the first time, affordable housing manufactured housing communities must either be resident/government/nonprofit-owned or must have tenant pad lease protections to be counted as mission-driven, affordable housing. Under the 2020 cap structure 37.5 percent of the multifamily business had to be mission-driven, affordable housing.

“Multifamily housing is a critical component of the nation’s housing supply and especially of its affordable housing stock,” said FHFA Director Mark Calabria. “As we continue to address the shortage of affordable housing, especially amid the COVID crisis, FHFA will keep a close eye on the multifamily caps to ensure that they are sufficient and serve to increase the supply of affordable housing but do not crowd out private capital.”

Mortgage Bankers Association President & CEO Robert Broeksmit, CMB, issued the following statement:

“MBA is pleased to see FHFA’s continued commitment on providing liquidity to multifamily housing. The $70 billion cap for each GSE aims to support all forms of finance without crowding out private capital. The caps direct additional focus to affordable housing finance, an important component of the ongoing economic recovery. We will be analyzing the specific components of the caps to understand how they will affect the GSEs’ mission and the ability of the overall multifamily finance sector to meet the market’s needs.

“If the pandemic’s impact on the market calls for a change, we agree that FHFA should adjust the cap and its requirements.

“MBA looks forward to continuing its work with FHFA, the GSEs, and other stakeholders on issues affecting both the commercial and multifamily markets.”

FHFA noted consistent with the 2020 cap structure, the new caps apply to all multifamily business with no exclusions. However, the 2021 cap structure, like the cap structures from 2014 through 2019, only covers the four quarters of the 2021 calendar year. This is a change from caps announced last fall which covered five quarters.

FHFA also requires at least 20 percent of the GSEs’ multifamily business be affordable to residents at 60 percent AMI or below. This new minimum share of business affordable to 60 percent of AMI households assures that the Enterprises’ multifamily businesses have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are most difficult to serve.

FHFA also announced changes to simplify the multifamily definitions of mission-driven, affordable housing in Appendix A and to better align the definitions with those used by FHFA’s Duty to Serve (DTS) and Housing Goals programs. The definition of mission-driven, affordable housing is now housing that is affordable for residents at 80 percent of area median income (AMI) or below, with special provisions for rural housing and for manufactured housing communities (MHC).

To align with the Duty to Serve regulation and to ensure continued support for rural communities, a loan is classified as mission-driven, affordable housing if the property is in a DTS-designated rural area and affordable to residents at 100 percent of AMI or below. MHC loans are classified as mission-driven, affordable housing if they also receive DTS credit. MHCs must meet affordability requirements, and either is resident/government/nonprofit-owned or adopts the tenant pad lease protections included in the DTS regulation.

Links to the Multifamily Caps Fact Sheet and Revised Appendix A.