FHFA to Maintain Multifamily Loan Caps for GSEs

November 15, 2018

The Federal Housing Finance Agency announced that it will maintain Fannie Mae and Freddie Mac’s caps for multifamily lending at the current level of $35 billion for each GSE. The determination was based on FHFA’s projection that the 2019 multifamily finance market will remain on par with 2018. Multifamily loans in designated affordable and underserved segments will remain excluded from the caps, and FHFA will review the caps on a quarterly basis.

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.  To prevent disruption in the market, if FHFA determines that the actual size of the 2019 market is smaller than was initially projected it will not reduce the caps, however.

The multifamily lending caps are intended to further FHFA’s strategic goal that the Enterprises provide liquidity for the multifamily market without impeding the participation of private capital.  Because market support for affordable multifamily housing has historically been limited, FHFA will continue to exclude from the 2019 caps certain loans in the affordable and underserved market segments.  For 2019, FHFA is making the following changes to these excluded categories: 

  • Loans to finance energy or water efficiency improvements: FHFA is increasing 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.  To qualify for exclusion from the cap, multifamily loans that finance energy or water efficiency improvements must project a minimum 30 percent reduction in whole property energy and water consumption and a minimum of 15 percent of the reduction must be in energy consumption.  FHFA is also adding a data collection requirement for all excluded Green Rewards and Green Up/Green Up Plus loans, which requires engagement of a third-party data collection firm prior to closing.  The consumption reduction threshold ensures that the benefits from green renovations are passed through to the tenants, while the added data requirement allows FHFA to assess the efficacy of the Enterprises’ green improvements programs on an ongoing basis. ?
  • Loans on affordable units in cost-burdened renter markets: To address the critical shortages of affordable rental housing in specific markets, FHFA has developed a data-driven approach it will follow to designate markets in which units affordable to cost-burdened renters at certain area median income levels will be excluded from the multifamily cap on a pro-rata basis.  This data-driven process will ensure that exclusions from the cap are focused on markets where renters are most cost-burdened and will result in less variation in market designations over time and offer greater stability to the multifamily market.


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