WASHINGTON – The Federal Housing Finance Agency (FHFA) announced that the 2021 multifamily loan purchase caps for Fannie Mae and Freddie Mac (“the Enterprises”) will be $70 billion for each.
The cap structure allows the Enterprises to offer a combined total of $140 billion in support to the multifamily market.
At least 50% of the Enterprises multifamily loans are required to be used for affordable housing. Additionally, for the first time, affordable housing manufactured housing communities (MHC) must either be resident/government/ nonprofit-owned or must have tenant pad lease protections to be counted as mission-driven, affordable housing.
“Multifamily housing is a critical component of the nation’s housing supply and especially of its affordable housing stock,” FHFA Director Mark Calabria said. “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.”
Consistent with the 2020 cap structure, the new caps apply to all multifamily business with no exclusions. However, the 2021 cap structure covers only the four quarters of the 2021 calendar year. This is a change from caps announced last fall which covered five quarters.
To ensure a strong focus on affordable housing and traditionally underserved markets, the 2021 caps require at least 50% of the Enterprises’ multifamily business to be mission-driven, affordable housing. Under the 2020 cap structure 37.5% of the multifamily business had to be mission-driven, affordable housing.
FHFA also requires at least 20% of the Enterprises’ multifamily business to be affordable to residents at 60% percent of area median income (AMI) or below. This new minimum share of business affordable to 60% of AMI house-holds 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, Calabria said.
FHFA also announced changes to simplify the multifamily definitions of mission-driven, affordable housing. The new definition of mission-driven, affordable housing is housing that is affordable for residents at 80% of AMI or below, with special provisions for rural housing and for manufactured housing communities.