FHFA Cuts GSE Lending Caps

The Federal Housing Finance Agency has cut the lending caps for Fannie Mae and Freddie Mac to $70 billion each for a total of $140 billion.

That is down from the $150 billion in 2023, $156 billion in 2022, and return to the levels of 2021. Pre-pandemic, the caps in 2018 and 2019 were $35 billion for each of the government-sponsored enterprises (GSE), even as the landscape of multifamily deployment and lending change.

“To ensure a strong focus on affordable housing and underserved markets, FHFA will require that at least 50 percent of the Enterprises’ multifamily businesses be mission-driven, affordable housing,” the FHFA wrote. “In addition, for 2024, loans classified as supporting workforce housing properties in Appendix A of the Conservatorship Scorecard will be exempt from the volume caps. All other mission-driven loans remain subject to the volume caps.”

Examples of mission-driven loans would include those on properties that are subsidized by the Low-Income Housing Tax Credit (LIHTC). FHFA also mentioned properties covered by Section 8 housing or a property where the borrower is a Public Housing Authority.

“Loans to preserve affordability at workforce housing properties may be exempt from the caps and classified as mission-driven if the property has units that are subject to either rent or income restrictions codified in loan agreements,” the agency wrote. “FHFA will exempt from the volume cap the full loan amount of all loans where the loan agreements require a sponsor to preserve affordability at the “other affordable” market levels outlined below or that adhere to the standard of a state or local housing affordability initiative, for at least 10 years or the term of the loan. FHFA will classify as mission-driven 50 percent of the loan amount if the percentage of restricted units is less than 20 percent of the total units in a project, and 100 percent of the loan amount if the percentage of restricted units is equal to or more than 20 percent.”

The FHFA said it anticipated that “the 2024 cap levels will be appropriate given current market forecasts,” but that the agency would “monitor the mortgage market and increase the caps if necessary.” However, if the market is smaller than expected, they won’t reduce the caps.

Jeff Klotz, founder and CEO of The Klotz Group of Companies, has previously told GlobeSt.com that the GSEs “still remain the top choices, the top opportunities. They’re still offering some of the best lending opportunities available in the marketplace.”