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GSE multifamily lending caps will stay the same


Fannie Mae and Freddie Mac will have the same $35 billion cap on multifamily lending in 2019, but so-called environmentally friendly developments will have to meet a higher standard to gain an exclusion from the cap, their federal regulator announced.

The Federal Housing Finance Agency said the caps are based on FHFA’s projections of the overall size of the multifamily market, which is expected to remain relatively flat next year. 

The GSEs funding volume in the multifamily space has increased dramatically during FHFA Director Mel Watt's tenure, jumping from $56.6 billion in 2014 in Watt's first year to $140 billion last year. The government-sponsored enterprises have greatly increased their activity in the uncapped space, including bankrolling an explosion in green-energy efficiency projects over the past three years. 

Conservative think tanks, such as the American Enterprise Institute and The Heritage Foundation, have called on the FHFA to forcibly reduce the GSE footprint.The latest announcement only tightens the restrictions on uncapped lending in one area. 

FHFA has increased the requirements on projects that include energy or water efficiencies. Those projects will have to realize a combined 30 percent reduction in total energy and water consumption, which includes a minimum 15 percent reduction in energy consumption, FHFA indicated. The previous standard required a combined 25 percent energy or water savings.

The agency also indicated it was switching to a data-driven approach to determining when affordable-apartment projects could be excluded from the cap in high-cost areas. Previously, units at rents affordable to those at or below 120 percent of the area median income in extremely high cost markets were eligible for an exclusion. 


 

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