The Federal Housing Finance Agency on Tuesday reduced
Government-related investors that the FHFA oversees, Fannie Mae and Freddie Mae, will be able to buy $70 billion in loans each in 2024, down from $75 billion. Mortgages for
Workforce housing credit toward mission goals will be contingent on the share of units for which owners are restricting rent increases for at least 10 years or the term of the loan. At least 20% will need to protect affordability in this way for full credit. Lenders get half credit if the share is less than 20%.
The dividing line for half- and full credit on workforce housing loans will be lower than it was this year, when it was 50%. Taken together with the new exemption, this suggests FHFA officials are prioritizing getting more participation from lenders.
"The workforce housing exemption should encourage conventional borrowers to commit to preserving rents at affordable levels for extended periods of time," FHFA Director Sandra Thompson said in a press release.
The overall cap decrease marks the second consecutive year in which FHFA has lowered the limit in line with the impact of relatively higher interest rates on the market. The caps and other restrictions aim to allow Fannie and Freddie to support affordable housing without crowding out private capital.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, called the decrease "reasonable, given the challenging market conditions," in an emailed statement.
Caps can be adjusted upward during the year if volume is higher than expected but FHFA promised not to lower them.
"We appreciate FHFA's ongoing flexibility should adjustments to the caps and mission-driven requirements be necessary and believe exempting loans supporting workforce housing from the cap levels will help to ensure GSE financing is a viable option," Broeksmit said.
In addition to workforce housing, other types of loans that count toward mission-driven lending credit include those that fund other apartment buildings with all or some units reserved for renters with restricted incomes. Credit is more directly proportionate to the share of units in this category.
Tenants must meet certain area median income thresholds, with some leeway given to AMIs up to 100% or 120% in specific markets considered "cost burdened." In other cases, a standard 80% AMI limit may apply. Areas designated as rural under
DTS blanket loans on manufactured housing communities, secured by property and rental pads, may also count toward the mission-related loan quota. Loans that fund energy or water efficiency improvements can be considered mission-related if they meet certain AMI requirements.
In other multifamily news, Freddie Mac recently banned third-party originator involvement in document transmission, according to
