Fannie-Freddie Apartment Loan Limits Eased as Lending Soars

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The agency that oversees Fannie Mae and Freddie Mac is allowing the companies to increase their financing of multifamily mortgages this year as they near limits following a surge in lending.

The Federal Housing Finance Agency is exempting additional types of multifamily mortgages from counting towards $30 billion financing caps on both Fannie Mae and Freddie Mac that it set in January, the regulator said on Thursday. Both Fannie Mae and Freddie Mac are on track to hit those caps by the third quarter.

Agency lenders have pushed for the restrictions to be liberalized in recent weeks to avoid a possible tightening of multifamily credit and higher borrowing costs. Both Fannie Mae and Freddie Mac have boosted their apartment financing four-fold through April from a year ago, spurred by rising demand for rental units and low interest rates.

“It shows that the regulator is focused on liquidity in the markets,” said Susan Weber, a spokeswoman for Walker & Dunlop, a major lending partner of Fannie and Freddie.

FHFA said it will not raise the $30 billion limit on new multifamily lending.

The adjustment to the exclusions will apply to all multifamily business completed in 2015. Other changes include excluding some assisted living units from the caps and broadening the income threshold for affordability.

The broader definitions support FHFA director Mel Watt’s directive to expand credit to support affordable housing.

“We are pleased with FHFA’s decision to modify the production cap for new multifamily GSE business,” Jeffery Hayward, executive vice president at Fannie Mae, said in an e-mailed statement. “This flexibility will help us serve this important market, so that working families in every community have access to quality rental housing every day.”

(Updates with quote in fourth paragraph.)
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