WASHINGTON, DC—The Federal Housing Finance Agency officially unveiled its 2016 Scorecard for Fannie Mae and Freddie Mac [PDF] last week. Director Melvin Watt put the multifamily industry out of its suspenseful misery in October of this year when he said in a speech that the GSEs' multifamily lending cap would remain at $30 billion each. As it turned out, that was not strictly correct -- the cap has been set at $31 billion. Watt also said that the exclusions to the cap would be expanded, casually mentioning in an aside that energy efficiency would be on the list.

Now that the Scorecard has been published, let me spell out the implications of what the FHFA has done: By adding energy-energy efficient loans to the exclusions, it has overtly given the GSEs the mandate they needed to develop these product lines. In previous years green building finance was tacitly approved but, let's face it, for bureaucrats who can be summoned to Capitol Hill at any time to explain why they are doing XYZ with the tax payer's money, tacit doesn't always cut it.

In recent months there had been talk of the FHFA including energy efficiency provisions in an expected "Duty to Serve" proposal. Briefly, Duty to Serve is a proposal put forward by the FHFA expanding three specific underserved markets that the GSEs are to target. The FHFA has only released one Duty to Serve in the past several years. It released another one last week as well, which is now in the public comment period, after which it will be published in the Federal Register. Briefly, the Duty to Serve proposal focuses on expanding affordable housing preservation, manufactured housing and rural housing. As it happens, there is language about energy efficient lending in the Duty to Serve proposal, which gives the GSEs even further run room for this sector.