As we look back on 2021, I want to celebrate our accomplishments together and thank you for your partnership. 2021 has been another strong year.
It was great to see so many of you in Chicago at AHF Live. In our many meetings, we heard that you appreciate the consistent liquidity we provide to the market. We continue to see strong volumes with a total of $7.7 billion in affordable production through Q3 2021 compared to $4.8 billion at the same time last year. This increase is thanks to our tireless focus on improving our execution and fostering strong partnerships.
As always, our top priority is to be a reliable partner and we will continue to look for opportunities to increase delegation and create more efficiencies in our processes. We strive to provide the right mix of product offerings and are working together to meet the demands of the market.
FHFA announced the 2022 multifamily volume caps in October, and the cap for each Enterprise was increased from $70 billion to $78 billion. We believe the additional production will provide opportunities to create and preserve even more affordable rental housing. This announcement also included some definition changes to multifamily mission driven affordable housing. Highlights of the cap announcement include:
- At least 50% of the Enterprises’ multifamily business be mission-driven affordable housing. This is the same as the 2021 requirement.
- The percentage of units that must come from units affordable to residents at 60% area median income (AMI) or below has increased from 20% to 25%.
These changes increase our contribution to loans in cost-burdened markets and help us target more deeply affordable units for sustainability [green] enhancements.
We are waiting on the final Housing Goals for 2022-24 from FHFA. A public comment letter was submitted after reviewing the proposed rule. The proposed rule included an increase in our goal for low-income purchases from 315K to 415K units, our very low-income purchases from 60K to 88K units, and more than doubles our goal for purchasing loans that finance small 5–50-unit multifamily properties (from 10K to 23K units).
Sponsor Initiated Affordability (SIA)
To meet the growing demand for affordable housing, we created SIA which provides incentives to Borrowers to set aside a minimum of 20% of units for residents earning 80% or less of AMI. We are excited to see increased interest in SIA with pricing levels staying competitive.
While the original intent of SIA was to help preserve a slice of affordability in conventional properties, we are pleased to see that SIA can also add value for affordable deals. MAH Borrowers have been using the SIA Affordability Agreement and compliance framework to achieve objectives such as tax abatements and bridges to future Land Use Restriction Agreements (LURAs). We have also seen social impact Borrowers use the compliance components to create or preserve workforce housing.
SIA Spotlight – Preserving Affordability with LURA
A recent deal highlights one way that SIA has been used to bring new units into affordability. DUS® Lender Walker & Dunlop worked with borrower Jonathan Rose and experienced developers Dante Partners and L&M Development Partners to structure the financing of the Avanti, a 930-unit vintage garden community with 26 buildings in District Heights, MD. As part of the $164 million transaction, the sponsor will enter into a 15-year LURA that will restrict 20% of the units to 50% AMI and 20% of the units to 80% AMI – increasing and preserving the affordability at this property.
Reach out to your deal team to learn more about how SIA can be used to strengthen and enhance strategies to preserve and create affordable housing.
Meeting our Duty to Serve Requirements
Fannie Mae’s Duty to Serve activities focus on three key markets: manufactured housing, affordable housing preservation, and rural housing. We want to increase our engagement with lenders to achieve these objectives.
In rural housing, we continue to target high-needs rural regions. The Affordability Estimator includes County-Level Duty to Serve High Needs Rural Region eligibility and FHFA has resources are available including a High-Needs Counties and Rural tracts map.
We will continue to provide you with tools and resources and in the coming weeks will provide more detail on 2022 DTS eligibility. Learn more about our Duty to Serve program.
Thank you for your continued partnership and support. We look forward to a successful 2022!