Fannie Mae Increases Small Loan Limit for Multifamily Market

Written By: Joel Palmer, Op-Ed Writer

Fannie Mae has doubled the limit on multifamily small mortgage loans, from $3 million to $6 million. In addition, the limit in high-cost markets has been raised to $5 million.

Fannie said in a statement that the loan size increase will simplify the small loan definition. It will also provide more opportunities for borrowers to realize the benefits of streamlined third-party report, underwriting, and asset management requirements.

“Increasing the loan limit for our small mortgage loan program will provide more capital and liquidity to the small loan marketplace and help address the significant affordable workforce housing supply issues facing our country today,” said Michael Winters, Vice President, Multifamily Customer Engagement for Fannie Mae.

“Our commitment to providing sustainable financing solutions that enhance affordability, security, and convenience of financing smaller properties plays an important role in securing a key source of housing for working families.”

Fannie also announced that several new markets will receive pricing and underwriting benefits. Those markets include Denver, Miami, Minneapolis and Salt Lake City. Markets are chosen based on credit and economic performance.

Existing markets that receive these benefits are Baltimore; Boston; Chicago; Los Angeles; New York City; Oxnard, CA; Philadelphia; Portland, OR; Sacramento; San Diego, San Francisco; San Jose; Seattle; and Washington, D.C.

Fannie provided more than $65 billion in multifamily financing in 2018. It led the affordable market with overall production of $7.4 billion, an increase of 9 percent from 2017.

Fannie also recorded more than $20 billion in green financing for properties with Green Building Certifications or loans targeting a 25 percent reduction or more in energy or water consumption. Fannie was recognized as the largest issuer of Green Bonds in the world.

It’s 2018 financing also included:

•$2.2 billion for small loans

•$2.7 billion for student housing

•$9.5 billion for structured transactions

•$2.3 billion for senior housing

•$2.9 billion for manufactured housing communities

“Multifamily had another outstanding year in 2018, thanks to our lenders," said Rob Levin, Senior Vice President for Multifamily Customer Engagement. "Together, we supported all market segments, bringing liquidity to the market, while building a balanced portfolio that reflects our strategy with strong credit quality and mission-rich business.”

In other multifamily market news, Freddie Mac announced earlier this month that it led the industry with $78 billion in total production last year. Its financing included approximately 860,000 rental units, of which more than 90 percent of eligible units were affordable to low- and moderate-income households earning up to 120 percent of area median income.

"Freddie Mac Multifamily’s mission of making rental housing more accessible and affordable would not be possible without the best network of lenders in the mortgage banking industry,” said John Cannon, senior vice president of Freddie Mac Multifamily Production and Sales.

Freddie also announced that it created a new name for its multifamily seller/servicer network and suite of loan offerings: Optigo.

The company’s statement said Optigo “intends to capture the Freddie Mac Multifamily ethos of providing customers with optimal solutions and going further to meet their needs. It also aims to better clarify Multifamily’s Seller/Servicer network and offerings within the span of Freddie Mac’s broader business.”

“Optigo brings much needed distinction and identity to our market-leading multifamily Seller/Servicer network and our wide array of loan offerings,” said Debby Jenkins, executive vice president and head of Freddie Mac Multifamily. “Optigo is more than just a name — it’s the essence of what we strive to achieve for our customers. The culture of Freddie Mac Multifamily is one of optimal solutions and a drive toward excellence. We lead the market because we opt to go further for our customers.”

The Optigo offerings include loan products in four lines: Conventional, Targeted Affordable Housing, Small Balance Loans and Seniors Housing.

About the Author

As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

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