FHFA imposes a $140B cap to GSEs’ multifamily loan purchases in 2024

Government sponsored-enterprises (GSEs) Fannie Mae and Freddie Mac will each have a $70 billion cap for multifamily loan purchases in 2024, the Federal Housing Finance Agency (FHFA) announced Tuesday. 

The combined $140 billion volume considers the given market condition. Still, it can increase if necessary, as the FHFA will continue to monitor the multifamily mortgage market, it says in a recently published fact sheet. To prevent market disruption, FHFA will not reduce the cap if the size of the 2024 market is smaller than initially projected. 

According to the rules, at least 50% of the GSEs multifamily businesses should be directed to mission-driven, affordable housing. However, in 2024, loans classified as supporting workforce housing properties are exempt from the volume cap. 

This loans category, first developed in 2023, preserves rents at affordable levels in multifamily properties, typically without public subsidies. In this case, affordable levels correspond to 80%-120% of the area’s median income, depending on the market. 

“The workforce housing exemption should encourage conventional borrowers to commit to preserving rents at affordable levels for extended periods of time,” FHFA Director Sandra Thompson said in a statement. 

In 2014, the FHFA set a cap on Fannie and Freddie’s conventional (market-rate) multifamily business to ensure liquidity, especially in affordable housing and traditionally underserved segments, without crowding out private capital.

Over the last two years, the cap has been reduced. The level for 2024 is lower than in 2023 ($75 billion for each enterprise) and 2022 ($78 billion) 

“The 2024 multifamily loan caps, coupled with the exemption for workforce housing properties from the caps, will promote the Enterprises’ continued strong commitment to addressing the need for affordable rental housing,” Thompson said. 

The Mortgage Bankers Association (MBA) forecasts that multifamily lending is expected to drop to $285 billion this year – a 41% decline from last year’s total of $480 billion. 

According to the White House, roughly 35% of the U.S. population — or over 44 million households – live in rental housing. Nearly one-third of all rental units nationwide are financed with federally-backed mortgages. 

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