Mortgage Agencies — FHFA
Fannie Mae and Freddie Mac’s increased focus on affordable and workforce housing under Federal Housing Finance Agency Director Sandra Thompson is expected to intensify over the next several years.
The agencies in recent years have rolled out new products targeting affordable-housing projects that receive government subsidies.
Market pros said they expect the agencies will undertake efforts to support workforce housing or so-called naturally occurring affordable housing — housing that is affordable to moderate-income tenants but does not receive a government subsidy.
“Five years ago, everyone was championing affordable housing, and [the agencies have] done a great job,” said Evan Blau, a partner with Cassin & Cassin. “There is a desire to achieve what they did with affordable housing in the workforce housing space.”
Last year, the FHFA boosted the agencies’ goals for loan purchases on properties affordable at 60% of area median income to 25% of total volume from 20%.
The mission-driven goal, which includes workforce-housing loans affordable at 80% of area median income, stayed at 50% of volume, though it can go up to 100% or 120% of area median income in more expensive markets.
Blau said the regulator could increase the mission-driven target or expand the definition to 100% of area median income for all markets.
Multiple plans announced this year suggest the agencies will develop new products in the affordable- and workforce-housing spaces.
Equitable housing finance plans released in June outlined an array of programs, including ones that aim to increase diversity among multifamily developers and to encourage apartment owners to help build tenants’ credit histories and ease the path to homeownership.
Also included were duty-to-serve plans, which focus on the agencies’ commitment to improving capital access for rural housing, manufactured housing and affordable-housing preservation.
In manufactured housing, market pros are eyeing potential growth in chattel lending, where the agencies buy debt attached to mobile homes rather than the underlying land.
Some of the programs detailed in the agencies’ equity and duty-to-serve plans were echoed in the White House’s housing-supply action plan announced in May.
Market pros are paying closest attention to calls for the agencies to develop construction-financing programs. The agencies are still in a legal review period to assess whether their charters allow for that.
Government regulators also are exploring the use of special purpose credit programs designed to increase borrower diversity.
In February, eight financial regulatory agencies, including the FHFA and the Federal Reserve, issued a statement encouraging creditors to explore newly developed SPCPs.
Freddie said in its equitable housing finance plan that it would explore the viability of an SPCP that would target diverse multifamily borrowers, and both agencies are expected to announce new SPCPs by yearend.
Other programs that have attracted lender and regulatory interest include Fannie’s sponsor-initiated affordability program, which offers better pricing to apartment owners who commit to maintaining affordability.
In November 2021, Freddie announced a partnership with Esusu, which reports rental payments to credit agencies, and Freddie incorporated those rental payments in its single-family underwriting models this past July.
And in April, Fannie unrolled a pilot housing-choice voucher program in North Carolina and Texas, offering favorable pricing to apartment owners who commit to accepting Section 8 housing vouchers.
The agencies also have identified net worth requirements as a significant barrier to entry for diverse multifamily developers.
The FHFA is believed to be supportive of the push to increase developer diversity, but there are no clear solutions to the net worth issue.
“They’re starting to try to be more creative on that issue,” said an official familiar with the regulator’s thinking. “But it’s not just about the credit box. How can we provide the education, support and networking and all of those wraparound services to improve diversity?”
COMMERCIAL MORTGAGE ALERT: August 19, 2022
Click here for more information or call 949-640-8780.
REGULATORY ROUNDUP: Mortgage Agencies — FHFA, Commercial Mortgage Alert
Mortgage Agencies — FHFA
Fannie Mae and Freddie Mac’s increased focus on affordable and workforce housing under Federal Housing Finance Agency Director Sandra Thompson is expected to intensify over the next several years.
The agencies in recent years have rolled out new products targeting affordable-housing projects that receive government subsidies.
Market pros said they expect the agencies will undertake efforts to support workforce housing or so-called naturally occurring affordable housing — housing that is affordable to moderate-income tenants but does not receive a government subsidy.
“Five years ago, everyone was championing affordable housing, and [the agencies have] done a great job,” said Evan Blau, a partner with Cassin & Cassin. “There is a desire to achieve what they did with affordable housing in the workforce housing space.”
Last year, the FHFA boosted the agencies’ goals for loan purchases on properties affordable at 60% of area median income to 25% of total volume from 20%.
The mission-driven goal, which includes workforce-housing loans affordable at 80% of area median income, stayed at 50% of volume, though it can go up to 100% or 120% of area median income in more expensive markets.
Blau said the regulator could increase the mission-driven target or expand the definition to 100% of area median income for all markets.
Multiple plans announced this year suggest the agencies will develop new products in the affordable- and workforce-housing spaces.
Equitable housing finance plans released in June outlined an array of programs, including ones that aim to increase diversity among multifamily developers and to encourage apartment owners to help build tenants’ credit histories and ease the path to homeownership.
Also included were duty-to-serve plans, which focus on the agencies’ commitment to improving capital access for rural housing, manufactured housing and affordable-housing preservation.
In manufactured housing, market pros are eyeing potential growth in chattel lending, where the agencies buy debt attached to mobile homes rather than the underlying land.
Some of the programs detailed in the agencies’ equity and duty-to-serve plans were echoed in the White House’s housing-supply action plan announced in May.
Market pros are paying closest attention to calls for the agencies to develop construction-financing programs. The agencies are still in a legal review period to assess whether their charters allow for that.
Government regulators also are exploring the use of special purpose credit programs designed to increase borrower diversity.
In February, eight financial regulatory agencies, including the FHFA and the Federal Reserve, issued a statement encouraging creditors to explore newly developed SPCPs.
Freddie said in its equitable housing finance plan that it would explore the viability of an SPCP that would target diverse multifamily borrowers, and both agencies are expected to announce new SPCPs by yearend.
Other programs that have attracted lender and regulatory interest include Fannie’s sponsor-initiated affordability program, which offers better pricing to apartment owners who commit to maintaining affordability.
In November 2021, Freddie announced a partnership with Esusu, which reports rental payments to credit agencies, and Freddie incorporated those rental payments in its single-family underwriting models this past July.
And in April, Fannie unrolled a pilot housing-choice voucher program in North Carolina and Texas, offering favorable pricing to apartment owners who commit to accepting Section 8 housing vouchers.
The agencies also have identified net worth requirements as a significant barrier to entry for diverse multifamily developers.
The FHFA is believed to be supportive of the push to increase developer diversity, but there are no clear solutions to the net worth issue.
“They’re starting to try to be more creative on that issue,” said an official familiar with the regulator’s thinking. “But it’s not just about the credit box. How can we provide the education, support and networking and all of those wraparound services to improve diversity?”
COMMERCIAL MORTGAGE ALERT: August 19, 2022
Click here for more information or call 949-640-8780.
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CONTACT
Evan E. Blau
Partner
212.798.0121
eblau@cassinllp.com
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