Dive Brief:

• The Federal Housing Finance Agency is asking for comments on a proposed rule to set goals for the housing agencies — Fannie Mae and Freddie Mac — in 2023 and 2024. 
• Through the end of 2022, benchmark levels will be based on the total number of affordable units in multifamily properties financed by mortgage loans purchased by the agencies each year. 
• The proposed rule would establish 2023 and 2024 benchmark levels for the multifamily housing goals based on a new methodology — the percentage of affordable units in multifamily properties financed by mortgages purchased by Fannie Mae and Freddie Mac each year. Interested parties have until Oct. 17 to provide FHFA with a written response to the proposed rule.

Dive Insight:

Under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, FHFA must establish annual housing goals for both single-family and multifamily mortgages purchased by Fannie Mae and Freddie Mac. 

As defined under the Safety and Soundness Act, the multifamily goals include mortgages on multifamily properties with rental units affordable to low-income and very low-income families. 

FHFA’s most recent ruling in December 2021 established benchmark single-family housing goals for 2022 through 2024. Due to the uncertainty in housing markets associated with

COVID-19 and the potential for unforeseen changes to multifamily market conditions in 2023 and 2024, it only set multifamily goals for one year — 2022.

“That had a one-year goal that was affected by COVID,” Evan Blau, a New York-based partner and chair of the agency lending and affordable housing practice at Cassin & Cassin LLP, told Multifamily Dive. “They wanted to see how the market shook out. So you had this one-off performance metric that was based on total units. The change here is they want to do percentages.”

On the surface, it would seem changing the benchmark levels from the total number of affordable units to the percentage of affordable units in multifamily properties financed by mortgage loans purchased by the agencies shouldn’t be a significant disruption.

“Optically, what are they changing?” Blau told Multifamily Dive. “It doesn't seem like anything. But if you drill down, it's kind of interesting.”

Blau says that by changing the benchmark, FHFA Director Sandra L. Thompson demonstrates the agency’s commitment to affordability.

“Under your 2021 metric, if you were to hit those numbers, then theoretically you no longer have to meet requirements for further affordable housing,” Blau said. “From that perspective, you would think changing the methodology wouldn’t do anything. But if you go to a percentage, you still have to keep hitting those goals. Regardless of if you’re hitting the number of units, you have to keep going.”

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