FHFA Just Made it Easier for GSEs to Offer Green Loans

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.