In early November, the Federal Housing Finance Agency (FHFA) announced that multifamily lending caps for Fannie Mae and Freddie Mac will remain at $35 billion in 2019 based on a forecasted flat 2019 multifamily market compared to 2018.
These lending caps were based on the FHFA’s projections, as well as estimates from industry experts and analysts. The agency also announced they will review their projections quarterly to ensure the caps remain appropriate. However, they will not lower the lending caps if the markets are lower than projected.
According to the FHFA, there will be more information to come with the release of the 2019 Scorecard. Working towards the FHFA’s 2019 strategic goals, the 2019 lending caps will be changing exclusion requirements on two categories:
- Loans financing energy and water efficiency: Moving forward, the FHFA is increasing requirements for lending cap exclusion on loans through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up and Green Up Plus programs. These loans must project at least 30% reduction in energy and water consumption, and 15% or more must come from energy savings. Third-party data collection requirements will also be added to ensure the program will benefit tenants.
- Loans on affordable housing: The FHFA will use a data-driven approach to determine what loans will qualify for the lending cap exemption in order to increase available affordable housing in certain markets. The FHFA’s goal is to ensure lending cap exclusions focus on areas with the highest cost burdens.
How does this impact borrowers?
For loans that finance energy or water efficiency, developers will need to keep in mind the required energy efficiency minimums. Many developers opt for lighting improvements to work towards the 15% minimum energy savings. Other typical energy saving efforts are window or appliance replacements or upgrades to newer, energy saving products. Potential water saving options include toilet and shower head replacements or upgrades to reduce excessive water usage.
If you are looking to minimize your energy costs, EBI Consulting’s Energy and Sustainability team can assist you in your energy saving endeavors.