Yesterday, the Federal Housing Finance Agency (FHFA) announced the 2023 multifamily lending caps for Fannie Mae and Freddie Mac will be $75 billion each for a total of $150 billion, a modest reduction from the $156 billion this year.
In addition to the $75 billion caps for each Agency, the following requirements apply:
- In line with 2022, 50% of the business must meet the definition of mission-driven affordable housing
- FHFA has removed the requirement that 25% of the business be affordable at 60% AMI
- Loans in cost-burdened and very cost-burdened markets will be considered mission-driven at 100% AMI and 120% AMI, respectively
- Senior housing and small 5-50 loans unit properties will now be included in the other affordable mission-driven category
- Loans to finance water and energy improvements with units at 80% AMI (formerly 60% AMI) will be classified as mission-driven
- Targeted affordable loans with a majority of restricted units will count as though 100% of the loan amount is mission-driven
- Loans on other affordable units will count as mission-driven the pro rata portion of the loan amount based on the percentage of units with affordable, unsubsidized/market rents
Both Freddie Mac and Fannie Mae remain focused on mission-driven housing and continue to expand their definition with an eye toward affordability, access and sustainability. The caps are $3 billion less for each Agency compared to 2022, which indicates a likely reduction in overall multifamily mortgage activity in 2023. FHFA stated that they will be monitoring the multifamily mortgage market and will consider increasing the caps to support market liquidity, but in no event reduce the caps. The change in mission-driven business for cost-burdened markets means that some properties that had previously not received the benefits of workforce housing may now be eligible.
Berkadia’s partnership with Fannie Mae and Freddie Mac on preserving affordability in workforce housing helped lead to new products, and the new preservation category builds on our expertise. Berkadia is looking forward to continuing to work with our agency partners to fulfill their goals and meet their mission-driven and affordable housing needs.