Driving Toward Affordable in 2021

With November in the rearview mirror, we’re approaching the end of a road that’s been full of unexpected turns. The last few months have certainly qualified as “pedal to the metal.” I hope you were able to slow down and relax over the Thanksgiving break.

As you know, the 2021 Multifamily Loan Purchase Cap increases the mission-driven, affordable housing business requirement to 50% (up from 37.5%). Additionally, at least 20% of the mission business must be affordable at 60% area median income (AMI) or less. These benchmarks – along with additional cap changes – will allow us to lean even further into our mission.

We are confident we will be able to deliver affordable business as well as continue to improve calibration and turn times in the coming year, thanks to our increased affordable staffing and strategic focus on deal execution. In 2021, you also should expect to see borrower and originator calls specifically focused on our MAH business.

We’ll continue to provide updates pertaining to the new cap. As a starting point, we’ve released an updated Multifamily Affordability Estimator (MAE) reflecting 2021 requirements, but please reach out to your Affordable Deal Team with any questions.

Building on the M.TEB execution

Thanks to low interest rates, we’ve experienced greater interest in the MBS as Tax-Exempt Bond Collateral execution for both taxable and tax-exempt bonds. It’s an area we’re excited about, as M.TEBs increase affordable supply through both preservation and new construction.

There are also several benefits to borrowers, including:

• A streamlined execution with the precision you expect from DUS®.
• Flexible prepayment terms.
• Interest only options.
• The ability to generate premium to offset project costs and combine with  Mod-Rehab, Cost of Issuance Reimbursement, Green Rewards, and Healthy Housing Rewards™.

Through September, we’ve done M.TEB transactions in 20 states plus the District of Columbia – let’s keep that number growing!

Moving “forward” with big opportunities

More exciting news – we’ve financed our first non-LIHTC forward. Partnering with Lument Capital, we provided $22.5 million in financing for an acquisition in Steamboat Springs, CO. We’re hoping to expand our reach into the non-LIHTC forward space, so please bring us potential business in this area.

Another recent win was University & Fairview, a $42 million refinance in St. Paul, MN with JLL. Structured as a creative taxable forward with 4% LIHTC, the transaction will redevelop 11 parcels containing vacant dilapidated commercial buildings into 243 new, 100% affordable units. The development will also obtain Green Building and Healthy Housing Rewards Healthy Design™ Certifications.

These highlights are just a sample of the $4.8 billion in business we’ve done together through Q3 2020 – thank you for your continued partnership in a challenging year. We are looking forward to achieving even more in 2021.