The body says the changes assure a strong and growing commitment to affordable housing finance
The Federal Housing Finance Agency has announced it was raising the cap for multifamily loans financed by Fannie Mae and Freddie Mac to $78 billion for each government-sponsored enterprise in 2022.
The new loan limits, which are based on FHFA's projections of the overall growth of the multifamily originations market, increased from $70 billion for each enterprise in 2021.
"To ensure the enterprises continue to provide sufficient liquidity and support in the multifamily mortgage market, FHFA will continue to monitor impacts of COVID-19 on the multifamily mortgage market and will update the multifamily caps and mission-driven requirements if adjustments are warranted," the agency noted.
"However, to prevent market disruption, if FHFA determines that the actual size of the 2022 market is smaller than was initially projected, FHFA will not reduce the caps."
The FHFA said that it will require at least 50% of Fannie and Freddie's multifamily businesses to support affordable housing and traditionally underserved sectors. At least 25% of the firms' multifamily businesses must be affordable to residents at or below 60% of the area median income (AMI). The FHFA increased this requirement from 20% in 2021.
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Additionally, FHFA tweaked certain definitions of multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard. In 2022, the agency will allow the GSEs to classify affordable units in cost-burdened renter markets, as well as energy or water efficiency improvements with units affordable at or below 60% of AMI as "mission-driven."
"The increases of the multifamily loan purchase caps and higher mission-driven business requirements assure that the enterprises' multifamily businesses have a strong and growing commitment to affordable housing finance, particularly for residents and communities that are the most difficult to serve," said FHFA acting director Sandra Thompson.
