If you haven't seen the new FHFA scorecard for Multifamily, it has significantly limited the agencies ability to compete for non-mission business. Which is a fancy way of saying you won't be seeing aggressive agency quotes on Class A business or anything that does not have some affordability to it.
Good news for CMBS and other lending flavors that work to get solid Class A, B and some decent class C apartments. I think you'll start to notice an uptick in volume heading your way.
Has there been a reduction to the cap for Fannie/Freddie? What's the business limit for 2021?
Cap reduced to $70B per each agency and they must do at least 50% mission business. So you'll see better quotes on more workforce housing and less on newer apartments.
20% of all business must also be affordable at 60% AMI.
Ah very helpful thanks! So 35B each then. Isn't that the same as 2020? Granted not sure there's much activity this year.
By the way you wrote it I thought the cap was cut in half or something?
Last year the cap was $100B per each agency over 5 quarters (so ~$80B per year), with the requirement of at least 37.5% mission driven. The 2021 Cap is $70B per agency, but 50% must be mission driven, and of that 50% - at least 20% must be 60% AMI. They've also redefined mission so its 80% AMI nationwide, so no longer consider 100-120% AMI as you'd see in HCOL like San Fran and NYC, etc.
So this all boils down to - the agency's next year can do $35B of Class A business. But only if they do $35B in mission driven - but the mission driven is radically changed so that $35B in mission is going to be a higher bar to clear/obtain, so they aren't going to be doing as much Class A.
Source?
FHFA's press release yesterday?
Was having trouble finding the article.
Here it is https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-2021-MF-L…;
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