Fannie Mae Introduces Sponsor-Initiated Affordability Incentives for Multifamily Borrowers

WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) 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.”

Fannie Mae multifamily mortgage-backed securities (MBS) backed by SIA loans align with Fannie Mae’s Sustainable Bond Framework, which demonstrates Fannie Mae’s commitment to adhering to international standards in its issuance of green, social, and sustainable bonds. These securities will be disclosed as Multifamily Affordable Housing (MAH) and identified as social bonds. If the underlying SIA loan also qualifies for Fannie Mae’s Multifamily Green Financing, the MBS will be considered 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.