GSEs lower their multifamily lending caps for 2023

The Federal Housing Finance Agency on Thursday announced it’ll lower the multifamily lending caps for each of the two government-sponsored enterprises by $3 billion next year.

The annual cap for purchases of apartment loans by Fannie Mae and Freddie Mac was lowered to $75 billion each ($150 billion in total) due to the shrinking origination forecasts, according to the FHFA.

The agency could increase the limit to account for changes in market conditions if warranted next year. It promised to avoid disrupting the market by lowering the caps further.

In addition to lowering the annual cap, which had been increased by $8 billion for 2022, the agency is adding a new workforce housing category to its standing requirement that 50% of loans purchases be considered affordable “mission-driven” housing.

Loans in the workforce housing category “will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods,” FHFA Director Sandra Thompson said in a press release.

The amount of credit lenders will get from these loans will depend on the share of units that property owners are restricting rent increases on for at least 10 years.

At least 50% of the units in a project will need to protect affordability in this way to get full credit. If the number for units with restricted rents in a project is less than 50%, lenders will get half credit.

Multifamily mortgage lenders also will be getting a little more leeway with area median income limits for loans that finance energy or water efficiencies next year. The AMI limit will be raised to 80% from 60% to encourage these efficiencies in workforce housing.