The Federal Housing Finance Agency (FHFA) has revised the types of loans that would not count towards the calculation of the $30 billion production lending caps that Fannie Mae and Freddie Mac each operate under for multifamily loan purchases this year. The related guidelines were officially announced recently and experts estimate they could boost 2015 multifamily purchases to more than $40 billion.
The following new FHFA guidelines are retroactive to January 1 of this year:
- A pro rata portion of multifamily loan amounts purchased by Fannie and Freddie in 2015 will be excluded from the caps based on the percentage of units in a property affordable to renters at 60 percent of area median income;
- In higher cost areas, the income threshold for affordability will be raised to 80 percent of area median income; and
- For very high cost markets, the income threshold for affordability will be raised to 100 percent of area median income.
Importantly, last week Fannie and Freddie also revealed the high cost and very high cost markets that were announced, but not defined, last month. Several cities have specified counties only and can appear in either category - or don’t include the entire city listed. They are:
- High cost: New York City, Washington DC, Bridgeport, Chicago, Riverside/San Bernardino, Seattle, San Jose, San Diego and Miami; and
- Very high cost: Boston, Los Angeles, San Francisco, New York City and Miami.
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