FHFA said it would allow loans to finance energy or water efficiency improvements with units affordable at or below 80% of AMI to be classified as mission-driven, up from 60% AMI in 2022.
“This increase will allow the enterprises to expand their effort on energy and water conservation measures at workforce housing properties,” FHFA said in a press release.
The regulator also updated the criteria for Fannie Mae and Freddie Mac’s “mission-driven” businesses, which includes loans for affordable housing and underserved market segments. As per FHFA’s requirements, 50% of the firms’ multifamily businesses must be mission-driven, which the regulator defined as loan purchases that support:
- Targeted Affordable Housing properties where all or a portion of the units are income or rent-restricted as a result of a regulatory agreement or a recorded use restriction
- Workforce Housing properties where units are subject to either rent or income restrictions that are codified in loan agreements
- Other affordable units where rents are affordable to tenants at various income thresholds but are not subject to tenant income or rent restrictions
- Properties located in rural areas as defined by the Duty to Serve regulation
- Manufactured Housing Communities that receive credit under the Duty to Serve regulation, which requires tenant pad lease protections
- Energy- or water-efficiency improvements for units affordable at or below 80% of the area median income
“The loan purchase cap and new mission-driven requirements will shape how we approach the multifamily market in the year ahead,” said Kevin Palmer, head of Freddie Mac Multifamily. “As always, our goal is to be a consistent source of liquidity with a keen focus on supporting affordable multifamily housing. FHFA has again set strong mission requirements that set a clear north star for our business.”