Fannie Mae Introduces Sponsor-Initiated Affordability Incentives for Multifamily Borrowers

Rhea-AI Summary

Fannie Mae (OTCQB: FNMA) has introduced Sponsor-Initiated Affordability (SIA) incentives to enhance affordable multifamily housing. This initiative offers lower borrowing costs for borrowers who commit to maintaining at least 20% of units affordable for families earning below 80% of the area median income (AMI). In 2020, Fannie Mae financed $76 billion for the multifamily market, marking a record in its DUS program. The SIA loans will also support the creation of 'social' and 'sustainable' bonds, attracting investors focused on social impact.

Positive

• Introduces SIA incentives to lower borrowing costs for affordable housing.
• Encourages preservation of 20% of multifamily units for low-income families.
• Financed a record $76 billion in 2020, with a 9% increase in affordable housing volume.

Negative

• None.

WASHINGTON, March 16, 2021 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) announced today that it is offering Sponsor-Initiated Affordability (SIA) incentives for multifamily borrowers through its network of Delegated Underwriting and Servicing (DUS^®) lenders to lead the market in addressing the nation's shortage of affordable multifamily housing. The incentives aim to preserve naturally occurring affordable housing (NOAH) and workforce housing by encouraging property owners seeking Fannie Mae financing to agree to rent and income restrictions for residents living in conventional workforce housing.

The SIA incentives, in the form of lower borrowing costs, will be offered to borrowers who agree to preserve or create a minimum of 20% of units in a multifamily property affordable to residents earning less than 80% percent of area median income (AMI), adjusted for family size, over the life of a loan with rents not exceeding 30% of AMI. The rent and income restrictions will be documented in an affordability agreement and will require annual certification.

"Sponsor-Initiated Affordability pricing incentives help address the shortage of affordable rental housing in America at a time when rent growth is outpacing wages. Nearly half of the families and individuals renting their home spend more than 30% of their income on rent and this share continues to rise," said Rob Levin, Senior Vice President of Multifamily Customer Engagement, Fannie Mae. "SIA allows borrowers to strengthen communities by keeping rents affordable over the life of the loan, and helps ensure renters have more stability when it comes to housing-related expenses."

With SIA, Fannie Mae is creating new investment opportunities to attract investors interested in social impact. The securities backed by a SIA loan will be disclosed as Multifamily Affordable Housing (MAH) mortgage-backed securities (MBS), eligible to be labeled a "social" bond, and when coupled with green financing, a "sustainable" bond.

Fannie Mae provided $76 billion in financing to support the multifamily market in 2020, the highest volume in the history of its 32-year-old DUS program, and Multifamily Affordable Housing volume rose more than 9% to $7.8 billion from $7.2 billion in 2019.

About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:
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https://www.fanniemae.com/news

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Fannie Mae Resource Center
1-800-2FANNIE (800-232-6643)

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SOURCE Fannie Mae

FAQ

What are the new SIA incentives introduced by Fannie Mae?

The Sponsor-Initiated Affordability (SIA) incentives provide lower borrowing costs for multifamily borrowers who agree to keep 20% of units affordable for families earning less than 80% of area median income.

When did Fannie Mae announce the SIA incentives?

Fannie Mae announced the SIA incentives on March 16, 2021.

What financial impact did Fannie Mae have in 2020?

Fannie Mae financed $76 billion in the multifamily market in 2020, the highest volume in its DUS program's history.

How does SIA relate to social impact investing?

Loans backed by SIA will be labeled as Multifamily Affordable Housing mortgage-backed securities, which can be classified as 'social' bonds, attracting socially conscious investors.