GSE’s Multifamily Lending Topped Nearly $90 Billion Last Year
Push on Affordable Units Helped Freddie Mac and Fannie Mae Post Record Volumes
February 1, 2016
Freddie Mac and Fannie Mae together pumped almost $90 billion of financing into every corner of the multifamily market last year hitting a new record high.
And with recent federal adjustments to the two government sponsored enterprises (GSEs) lending volume caps, the two could hit new lending records again this year.
Freddie Mac was the larger of the two top multifamily lenders with $47.3 billion in loan purchase volume last year, up from $28.3 billion the previous year.
"Our financing is in every corner of the multifamily market and more diverse than ever, reaching into small balance loans, manufactured housing communities, seniors, student and government subsidized properties,” said David Brickman, executive vice president of Freddie Mac Multifamily. “We are focused on increasing the availability of mortgage capital, especially to the affordable and workforce housing sectors where demand continues to far outstrip supply."
Of the total new business volume, approximately $17 billion was not subject to the Federal Housing Finance Agency loan purchase $30 billion cap and included certain loans for affordable housing, smaller multifamily properties, seniors housing and manufactured housing communities.
Fannie Mae provided $42.3 billion in financing to the multifamily market in 2015 to support 569,000 units of multifamily housing - of which over 90% of the units financed support affordable or workforce housing.
Production highlights for individual business categories, which are part of the overall total 2015 multifamily production number, were as follows.
Multifamily Affordable Housing - (financing for rent-restricted properties and properties receiving other federal and state subsidies) $3 billion, an increase of 15% from $2.6 billion in 2014;
Manufactured Housing Communities - $786 million, an increase of 58% from $496 million in 2014;
Student Housing - $1.5 billion, an increase of 81% from $831 million in 2014;
Structured Transactions - $3.5 billion, an increase of 133% from $1.5 billion in 2014; and
Seniors Housing - $2.7 billion, an increase of 80% from $1.5 billion in 2014.
The push to fund affordable housing could lead to another record level this year.
“Our annual Scorecard has included a cap on the Enterprises' multifamily lending volume, with exceptions to the cap for certain affordable lending activities,” said Melvin L. Watt, director of the U.S. Federal Housing Finance Agency, which oversees the two entities. “Earlier this year, we broadened the categories of affordable multifamily lending that were excluded from FHFA's cap. We made these adjustments because the multifamily market grew more rapidly in the first half of 2015 than we had projected and because we wanted the Enterprises to prioritize multifamily purchases of affordable housing.”
Looking ahead to this year, Watt said FHFA expects to maintain our $30 billion cap for each Enterprise for market rate properties.
“However, we will institute a quarterly review process to make necessary adjustments if the market grows beyond our initial projections,” he added. “We will continue to exclude from the cap loans for affordable properties, including those in higher-cost areas. We will also continue to exclude certain loans for manufactured housing communities, as well as seniors housing and small multifamily properties affordable to low-income tenants.”
Also beginning this year, the FHFA expects to add two new exclusions - loans for low-income apartments in rural areas and loans for energy efficiency improvements.