The Federal Housing Finance Agency (FHFA) released its 2016 Scorecard on December 17, which is used to both assess activities at the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as well as outline priorities in the coming year. The new scorecard preserves the volume caps on multifamily business at Fannie and Freddie. But it raises the caps for each to $31 billion, in comparison to 2015 and 2014 when the caps remained the same at $30 billion for both.
Importantly, and beneficial to the multifamily industry, the caps will be reviewed quarterly during 2016 to determine if the overall market size is greater than forecast. The caps will not go down even if the market is smaller than forecast.
In addition, the 2016 Scorecard builds on the midyear 2015 Scorecard modifications that excluded certain loan purchases from the volume cap. It also incorporates provisions from FHFA’s recently issued “Duty to Serve” Guidelines. These provisions are favorable for the multifamily industry and include:
- Any loans encumbered by a regulatory agreement or use agreement, such as the Low Income Housing Tax Credit, inclusionary zoning or similar programs, will have either 50 percent or 100 percent of the loan amount excluded from the cap. That’s depending on whether the number of rent restricted units is greater or less than 50 percent respectively.
- Any loans meeting certain Area Median Income (AMI) limits in standard, high cost and very high cost markets will be excluded on a pro-rata basis to the loan amount.
- Any of these loans, meeting certain AMI restrictions, will be excluded on a pro-rata basis to the loan amount. These include rural areas, small loan, manufactured housing community blanket loans, and seniors housing assisted living properties.
- Loans to finance energy or water efficiency improvements. The loans included in this category are Fannie’s Green Rewards and Green MBS programs and any equivalent Freddie Mac loan programs.
NMHC/NAA have continued to express our opposition to caps on multifamily activity. Despite the continued inclusion of caps, we are encouraged that FHFA has included provisions that recognize the need for flexibility and continued review of the size of the market.