FHFA tapers 2023 multifamily loan purchase caps

Fannie, Freddie volume caps reduced from $78bn to $75bn.

The Federal Housing Finance Agency is reducing the multifamily loan purchase caps for Fannie Mae and Freddie Mac in 2023 because of macroeconomic uncertainty.

The agency published the now-reduced volume caps of $75 billion for each of the government-sponsored entities on November 10. The markdown represented a $3 billion cut from the $78 billion designated for each GSE in 2022.

FHFA said it anticipates the new cap levels to be appropriate based on current market forecasts, which have been afflicted by higher interest rates, persistent inflation and looming recessionary signals, leaving their own mark on lender and borrower appetite.

The agency said it was open to increasing the multifamily cap and mission-driven minimum requirements if the data showed changes warranting such adjustments and noted that if the 2023 market is smaller than projected, it will not reduce the caps.

Requirement revisions

As part of the agency’s affordable housing initiative, at least 50 percent of the enterprises’ multifamily business is still geared to be mission-driven, though new adjustments are inbound for the requirements.

FHFA will be removing the requirement that 25 percent of the enterprises’ multifamily business be affordable at 60 percent of area median income or below to taper inconsistencies with FHFA’s Housing Goals regulation.

The agency will also be creating a new category to focus on the preservation of affordability in workforce housing to stimulate the financing of loans on assets with rent or income limitations affordable at levels that meet market needs. “This is intended to support residents living closer to places of employment, hospitals, and schools,” FHFA wrote in its announcement.

Loans toward senior housing and five- to 50-unit multifamily properties will now be filtered into the ‘Other Affordable’ mission-driven category as part of FHFA’s attempt to streamline definitions.

The agency said loans to finance energy and water efficiency improvements with units affordable at or below 80 percent of AMI – up from 60 percent of AMI in 2022 – will now be considered mission-driven, marking its last revision for 2023 as of the November 10 brief.