The Federal Housing Finance Agency (“FHFA”) has proposed new single-family and multifamily housing goals for Fannie Mae and Freddie Mac (collectively, the “GSEs”) for 2018-2020.

For single-family housing, the proposed goals would require that the percentage of overall qualified single-family mortgage purchases for the GSEs be as follows: the Low-Income Home Purchase Goal would be 24%; the Very Low-Income Home Purchase Goal would be 6%; the Low-Income Areas Home Purchase Subgoal would be 15%; and the Low-Income Refinance Goal would be 21%. To meet these single-family housing goals, the single-family mortgages purchased must meet or exceed the benchmark level or the market level for that year.

For multifamily housing, the proposed goals would require that the GSEs purchase mortgages for multifamily properties (multifamily is defined as properties with five or more units) as follows: the Low-Income Goal would be 315,000 units; the Very Low-Income Goal would be 60,000 units; and the Low-Income Small Multifamily Subgoal would be 10,000 units. To meet these multifamily goals, the GSEs must meet these benchmarks outlined by FHFA.

FHFA’s website provides more details on the proposed goals, the timeline for submission of comments and a link to the Federal Register notice.  Comments are due September 5, 2017.

Last week, Ballard Spahr in conjunction with CSG Advisors hosted its 7th Annual Western Housing Conference in Phoenix, Arizona. The Conference brought together a wide range of public and private housing professionals facilitating a dynamic conversation on current developments in government-assisted housing.

The Conference opened with a “Washington Update” – a discussion on housing policy under the Trump Administration. Panelists Emily Cadik, Director of Public Policy at Enterprise Community Partners, and Peter Lawrence, Director of Public Policy and Government Relations at Novogradac & Company LLP, brought extensive insight into the political priorities driving forthcoming changes to government-assisted housing programs.

Significant takeaways from the discussion included:

  • The concern over a predicted decrease in HUD’s budget by $6 million, as outlined by the Washington Post on March 8th. Since the panel occurred, the Trump administration’s budget blueprint for fiscal year 2018 budget was released. Housing Plus posted a blog providing an overview of the budget blueprint on March 16, 2017.
  • The elimination of one or more of the tax credit programs, private activity bonds and/or the reduction of the corporate tax rate through tax reform will have significant impacts on the availability of equity financing needed to at least sustain affordable housing development at its current levels.
  • An infrastructure bill that includes housing may be an opportunity to meet any deficits created by HUD budget cuts to the Public Housing Capital Fund and Community Development Block Grant programs.
  • The spending caps under the existing Budget Control Act also pose a threat to government-assisted housing programs, especially in light of the proposed increases in defense spending and the resulting offsets that would be needed from non-defense discretionary spending.
  • Stakeholders should continue to invite legislators and members of Congress to ribbon cuttings and site visits in their districts. These visits are critical in gaining Congressional support for government-assisted housing programs.

The second session of the Conference focused on lessons learned from implementing the Rental Assistance Demonstration (RAD) program. Nicole Ferreira, Vice President for Development at the New York City Housing Authority, and Jenny Scanlin, Director of Development at the Housing Authority of the City of Los Angeles, each provided a case study from which they described the benefits and limitations of the program and the financial structures making each deal work. Beverly Rudman, Director of the Closing/Post Closing Department in HUD’s Office of Recapitalization, provided an update on the program and described particular challenges facing her office, which oversees the RAD program. The panel highlighted the following as effective tools for successfully underwriting a RAD deal and securing community and tenant buy-in: (1) Tenant Protection Vouchers, (2) the demolition and disposition process under Section 18 of the U.S. Housing Act of 1937, (3) seller take back financing from the Housing Authority and (4) federal and local redevelopment grants.

Panelists Tom Capp, Chief Operating Officer of Gorman & Company, C.J. Eisenbarth Hager, Director of Healthy Community Polices at Vitalyst Health Foundation, and Keon Montgomery, Housing Manager for the City of Phoenix Housing Department, then provided a local perspective on how private/public partnerships can be used to create sustaining change in communities. The panel emphasized the use of health studies in the predevelopment process to generate academic research on the specific needs of the impacted community and solicit funding from public and private partners to address those needs.

The last panel focused on the changes in the affordable housing finance market. Monty Childs, Director of Loan Origination and Structuring at Freddie Mac, John Ducey, Manager of Multifamily Affordable Housing-Credit at Fannie Mae, Sarah Garland, Senior Vice President at PNC Bank, Catalina Velma, Vice President of Public Housing at the National Equity Fund, and Cody Wilson, Director at Stifel, Nicolaus & Company, each provided a unique perspective on the impact of recent and prospective economic changes (e.g. tax reform, HUD budget cuts and rises in interest rates) on the equity, bond and lending markets, as well as the increased challenge in financing small and rural projects. The panel also discussed financing tools like Tax-Exempt Loans (Freddie Mac), Reduced Occupancy Affordable Rehab (ROAR) Execution (Fannie Mae) and FHA 221(d)(4) Loans (HUD), which have been found to address some of the challenges faced in the market.

A copy of the conference materials can be found here.

If you have any questions regarding the information above, or want more information on how to register for next year’s conference, please contact Jennifer Boehm at

The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, have announced that they are quickly approaching their 2015 volume caps. In January of this year, the Federal Housing Finance Agency (FHFA), who regulates these agencies, released its 2015 scorecard which detailed 2014 activities and outlined 2015 priorities for the agencies.  The scorecard retained the volume caps imposed on Fannie and Freddie for multifamily business; leaving Fannie at its 2014 cap of $30 billion, and increasing Freddie’s by $4 billion, to the same $30 billion.

In light of their volume to date, the GSEs predict that they may run dry of allocation as soon as late-Summer 2015. Fannie Mae has closed approximately $10 billion (or 33% of its cap) and Freddie has either closed or currently has in its pipeline $25 billion (or over 80% of its cap).

Having just completed the first quarter of 2015, the GSE’s are faced with having to mitigate the fleeing allocation.  They had already begun to increase pricing over the last few weeks and are likely to continue to do so for the foreseeable future. Both agencies have widened spreads at least 25 bps. Such increases have already placed them at higher rates than CMBS and life companies.  Freddie may increase pricing another 45 bps in the next week.  Such actions are likely to halt loan volume and throw Fannie and Freddie to the very rear of the competitive multifamily debt race, together with their stakeholders and servicer partners.

While this is bad news for those seeking market rate deals, there is a silver lining:  Freddie Mac’s Targeted Affordable Housing and Small Balance (less than $5MM) loan products and Fannie Mae’s Multifamily Affordable Housing, DUS Small Loan and Manufactured Housing Community loan products are exceptions from the volume cap allocation. These loans, typically for underserved markets and property types, may continue to flourish with the agencies, and are exactly the types of financing that the GSE’s and FHFA are committed to providing.

Both Fannie Mae and Freddie Mac have also developed several new rate lock programs that allow borrowers the ability to rate at least some portion of its interest rate with reduced underwriting on the part of the lender.  Those borrowers willing to take the increased risk with these new rate lock programs are rewarded by at least partly mitigating the future increase in spreads.


Housing Plus BlogSeveral exciting developments have recently brought changes to the affordable housing industry and we are inviting you to explore them with us at our fifth annual Western Housing Conference. Ballard Spahr and CSG Advisors are pleased to announce this year’s Best of the West in Affordable Housing Development and Financing conference on March 13, in San Francisco. The conference features movers and shakers in affordable housing leading panels, roundtables, and discussion about the most pertinent issues and developments shaping the housing industry.

The Legislative Update Panel has its hand on the pulse of Capitol Hill. Discussion will explore the implication and future of legislation and policies that affect the affordable housing industry.

HUD’s Rental Assistance Demonstration (RAD) Program experienced a boost in governmental support with the recent cap increase. The RAD program now offers renewed opportunities for housing authorities and developers to finance, transform, and create long-term housing options for low-income residents. The RAD Panel brings together a panorama of perspectives to discuss the need-to-know policies, timelines, financing structures, and organizational approaches to the revitalized RAD program.

The Finance Trends and Innovations Panel will offer insights to new loan products, lender programs, and interest rate structures taking shape in affordable housing finance. The discussion will examine new funding sources as a strategic means to preserve and sustain affordable housing.

Roundtable forums will feature Year 15 challenges and the implications of Fair Housing: Disparate Impact. Discussion will examine these two important topics and provide strategies, considerations, and expectations for the future of affordable housing development and management.

Registration for the event is free, and a detailed program description is available.

It is our privilege to create such an informative and collaborative forum for dialogue, exploration, and networking within an industry about which we feel so passionate. Though we will certainly blog about conference updates and insights, we hope you will join us in person.

Today, HUD hosted a focus group of nearly a dozen key stakeholders to gain insights about the RAD process.  I had the opportunity to participate in the sessions along with housing authority representatives, lenders, investors, private developers, financial advisors and other consultants.  Discussion questions explored issues extending from the RAD application process through to post-closing implementation of the RAD conversion.  With the cap on the maximum number of units permitted to go through the RAD conversion process raised to 185,000, HUD is now faced with the significant task of ensuring the initial procedures for processing and closing RAD deals can be streamlined and implemented in an efficient manner that imposes consistency across transactions.

Facilitated by members of the Enterprise team, the discussions considered positive elements of the RAD process, as well as areas in which HUD could make improvements.  Notetakers from HUD did not participate in the discussions, but sat in on the sessions to record insights and suggestions.

HUD will host additional focus groups in the next few weeks in other parts of the country, including Atlanta and Los Angeles.  The outcome will hopefully generate procedures that address issues and concerns that have arisen thus far in closing RAD deals.


MoneyIn what may be one of the longest tests of perseverance and intestinal fortitude in the history of legislative advocacy for affordable housing, supporters of the National Housing Trust Fund (NHTF) finally saw their proposal come to fruition late last week. On December 11, the Federal Housing Finance Agency (FHFA) formally directed Fannie Mae and Freddie Mac to begin setting aside and allocating funds for  the  NHTF and the Capital Magnet Fund (CMF).  While both programs were authorized by the Housing and Economic Recovery Act of 2008, the FHFA suspended the set-aside to allow the enterprises to recover during their conservatorship period. While the GSEs are still in conservatorship, the FHFA has determined that they are financially stable enough to withstand the .042 percent set aside which will finance both funds. The Fannie and Freddie must begin putting monies for the programs in January 2015. The coalition of housing advocates, led by the National Low Income Housing Coalition, have tried multiple strategies for implementing NHTF and getting it funded, including several versions of legislation that would have provide funding from the GSEs and, more recently, a bill sponsored by Rep. Keith Ellison (D-MN) which would have generated funds through revisions to the mortgage interest deduction.

Comparable to the HOME Investments Partnership program, the NHTF is a need-based allocation that will provide grants to state and local governments for the acquisition, new construction, reconstruction, and/or rehabilitation of affordable housing.  It will be administered by the U.S. Department of Housing and Urban Development (HUD) under regulations which were originally proposed back in 2010, but not yet finalized.  It is targeted largely at rental housing for extremely low income households (0-30% of AMI).  CMF, administered by the U.S. Department of Treasury, directs grants to Community Development Financial Institutions and others sponsors of local economic and community development projects.  Although it only received appropriations once in 2009,  the Fund has a proven track record—the initial award distributed in 2010 leveraged $1 billion of private capital for high poverty neighborhoods and preserved 6,800 units of affordable housing.

Some have called the FHFA’s announcement strategically timed to correspond with the House’s approval of the continuing-resolution omnibus spending bill, which has established the fiscal year 2015 funding levels for corresponding HUD programs, including HOME.  There has always been concern among housing advocates that once there was a dedicated stream of funds outside of the Federal budget process for affordable housing that Congress would stop providing for the HOME program which has been subject to substantial cuts in the last few years.  The FHFA announcement has also produced varied reactions from the Hill, with Republicans questioning the GSE’s ability to maintain profitability with an added set-aside, and Democrats praising the funds as a boon for both low-income families and the American economy at large.

It is expected that the funds for both NHTF and CMF will be available beginning in early 2016.  We will continue to keep you updated as HUD finalizes the program rule for NHTF.

For more, visit the FHFA website to review the letters to Fannie Mae and Freddie Mac as well as the FHFA official statement and HUD’s website for  Secretary Castro’s statement.


On April 24,2014, Fannie Mae hosted its semi-annual Legal Issues Forum (“LIF”) where the state of the multifamily finance market and recent developments in its multifamily program were the primary topics of discussion.  This year, Anne McCulloch, Senior Vice President, Multifamily Legal and Hillary Provinse, Vice President, Multifamily Customer Engagement, gave the opening remarks.  McCulloch shared her perspective on Fannie Mae’s multifamily business and provided an overview of the legislative landscape that the government sponsored entities will navigate going forward.  Provinse, on the other hand, shared her insights on trends in the multifamily market and provided projections for the 2014 multifamily production volume.

Unlike past LIFs, most of the panels included a combination of members of the Multifamily Mortgage Business (“MMB”), in-house counsel and/or lender’s counsel as participants, which included Ballard Spahr’s Andrew Rogers and Anna Mahaney.  This was a favorable change because it created a larger platform for discourse by having both Fannie Mae in-house counsel and MMB members available to answer questions and discuss issues throughout the LIF.

With an ambitious agenda on the table, the spring LIF covered a broad range of topics, including:

  • MBS Update
  • Multifamily Affordable Housing Update
  • Master Lease Loan Documents; Historic Tax Credit Transactions
  • Transfers for Tiers 3 and 4
  • Loss Mitigation Update
  • Lender Update
  • Guide Update
  • Annotated Loan Agreement Status Update
  • Preferred Equity/Mezzanine Debt.

Despite the hefty agenda, it was an afternoon well spent and, I suspect, Fannie Mae insiders would likely agree.  Based on the updates provided at the LIF, we anticipate future blog entries when the various Guide updates and new modifications to the multifamily loan documents are published.

Bank 2In the past month, Fannie Mae has issued preferred equity guidance and has updated its adjustable rate loan document forms to account for the change in LIBOR administrator.

  • Preferred Equity Requirements:

On March 31, Fannie Mae published preferred equity guidance in its Seller/Servicer Guide.  Fannie Mae defines Preferred Equity as being equity investments in which the equity owner is entitled to preferred returns relative to the other equity owners in a borrower entity.  Fannie Mae draws a distinction between “Soft Preferred Equity” and “Hard Preferred Equity” that distinction is tied to the rights of the preferred equity holder to receive its payments regardless of the availability of property cash flow to support those payments.  If a Preferred Equity holder has rights to preferred returns regardless of available property cash flow, the Preferred Equity is considered “Hard Preferred Equity” and if it does not have those rights, it is considered to be Soft Preferred Equity.  Fannie Mae has clarified in these provisions of the Seller/Servicer Guide that it will treat “Soft Preferred Equity” and “Hard Preferred Equity” differently.  Fannie Mae further clarified that cases of Soft Preferred Equity that are Preferred Equity only because they involve promoted interests or priority waterfalls will be left to the DUS lenders to evaluate and review.  Other forms of Preferred Equity will be subject to more extensive requirements and may disqualify a borrower structure from qualifying for financing.

  • LIBOR Administration References:

Fannie Mae also recently published updated forms to update references to the administrator of the London Interbank Offered Rate (LIBOR).  As is fairly well known, effective February 1, 2014, the British Banker’s Association ceased to be the administrator of LIBOR and was replaced in that capacity by ICE Benchmark Administration Limited.  The adjustments to Fannie Mae’s form adjustable rate loan documents simply documented that change.  The forms impacted by this change are Schedules 2 and 3 of the Multifamily Loan and Security Agreement.

“Housing is experiencing a calm before the storm”, is how National Housing Conference CEO Chris Estes described how housing programs fared in the President’s Fiscal Year 2015 budget request during a presentation at the Ballard Spahr Best of the West Housing Conference this past Friday in San Francisco. While many of the rental assistance programs received increases over last year’s appropriations levels after 2 years of what seemed like a free fall, almost every account remains short funded. Of particular concern is the effort to “re-baseline” the project-based rental assistance account by seeking only 8 months of funding this year, which means this account will require a significant increase in 2016 to ensure a full year of funding for all existing contracts. Chris invited anyone interested in learning more about this topic to participate in the April 16th webinar NHC is sponsoring with HUD.

The audience was particularly attentive to Chris’s perspectives on the recently released bi-partisan proposal to reform the GSEs. The Johnson-Crapo bill would wind down Fannie Mae and Freddie Mac over a number of years, but continue the successful work both organizations do in the multi-family space, ensure focused attention on rural communities, and limit government risk. While this proposal followed many months of hearings and input from a broad spectrum of parties, Chris reiterated that there will be continued discussion and modifications before GSE reform will be enacted.

Chris also talked about how the recent discussion paper regarding tax reform proposals issued by House Ways and Means Chairman, David Camp, could impact the low income housing tax credit (LIHTC). The proposal would continue a modified version of the 9 percent tax credit, however, it would eliminate the 4 percent credit used with private activity bonds. Given that tax reform is no longer as pressing an issue on the national agenda, it is not likely that the LIHTC will be revisited in the very near future. This discussion could be renewed, however, in the next couple of years.

Other topics batted around included the National Housing Trust Fund (good chance for funding this year), the Rental Assistance Demonstration Program (good chance of further expansion this year) and funding for CDBG and HOME (continue to be susceptible to more cuts).

Lots of heads in the room nodded as Chris discussed the importance of continued advocacy by all corners of the housing world to preserve and expand programs that support affordable housing. “We have to characterize ourselves not as an industry which is interested only economic gains for itself, but as a movement,” Chris said. Continuing to emphasize how affordable housing investments yield cost savings in other government programs, including Medicare/Medicaid, criminal justice, education, foster care, and many others is an important part of telling our story effectively to lawmakers.

Many thanks to Chris for taking the long plane ride to be with us at the Best of the West. I, for one, am looking forward to coming back to the Bay Area to attend NHC’s Solutions Conference November in Oakland. Ballard was a proud sponsor of this event last year in Atlanta that provided an impressive interactive format that fostered great discussions among participants. We are looking forward to this innovative event again this year. Hope to see you there!