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The caps will be $75 billion for each government-sponsored enterprise (GSE), for a combined total of $150 billion to support the multifamily market, FHFA said. The 2023 caps reflect an anticipated contraction of the multifamily originations market in 2023, it said.
To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA said, it will require that at least 50% of each GSE’s multifamily business be mission-driven affordable housing.
“The 2023 multifamily loan caps, coupled with a new mission-driven category for workforce housing properties, will continue to ensure that the enterprises have a strong commitment to addressing the need for affordable housing,” said Director Sandra L. Thompson. “The new workforce housing category will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods of time.”
In addition to announcing the new caps, FHFA also has changed certain definitions of multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard.
In 2023, FHFA will allow loans to finance energy or water efficiency improvements with units affordable at or below 80% of area median income (AMI) to be classified as mission-driven, up from 60% AMI in 2022. The increase will allow the GSEs to expand their efforts on energy and water conservation measures at workforce housing properties, FHFA said.
To ensure that Fannie and Freddie continue to provide sufficient liquidity and support in the multifamily mortgage market, FHFA will continue to monitor the multifamily mortgage market and will update the multifamily caps and mission-driven requirements if adjustments are warranted, it said.
To prevent market disruption, however, if FHFA determines that the actual size of the 2023 market is smaller than was initially projected, FHFA will not reduce the caps, it said.