Fannie-Freddie's Multifamily Loan Cap Kept Unchanged in 2016

The U.S. regulator of Freddie Mac and Fannie Mae is maintaining its $30 billion multifamily loan cap next year for each mortgage company.

The Federal Housing Finance Agency, which oversees the two government-sponsored enterprises, plans to institute a quarterly review to allow for possible adjustments, given market conditions, director, Melvin L. Watt, said Monday at a conference in San Diego.

“We anticipate that next year’s scorecard will also maintain the broadened list of exclusions from the cap that we put in place earlier this year,” Watt said in the remarks.

Commercial real estate lenders that finance residential apartment buildings had sought an increase to the amount of loan volume that Fannie and Freddie can finance annually. Both companies were on track to breach their limits earlier this year. The FHFA exempted additional types of multifamily mortgages from counting toward the financing caps.

The FHFA will continue to make certain exemptions to the business limits to accommodate affordable properties, including those in higher-cost areas, Watts said. Other exemptions will include certain loans for manufactured housing communities, as well as loans for seniors’ housing and small multifamily properties targeting low-income tenants.

Two new exclusions in 2016 are expected to include loans for low-income apartments in rural areas and loans for energy efficiency improvements that meet FHFA criteria, Watts said.

Fannie and Freddie have boosted their multifamily financing to a combined $66.4 billion this year, spurred by demand for rental units and more refinancings due to low interest rates. Up to $12 billion in “relief” for each company could be expected under the new exclusions this year, Jade Rahmani, an analyst at Keefe, Bruyette & Woods, wrote in a Oct. 14 report.

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