Multifamily Wire

Multifamily Facts

2018 FHFA Cap Exclusion Changes

On November 21, 2017, FHFA released new requirements regarding 2018 Cap Exclusions that impact our Green Rewards product. In 2018, Green Rewards deals are 100% excluded from the Cap when the owner commits to reducing the Property's energy consumption by at least 25% or the property's water consumption by at least 25%. FHFA has recognized that achieving a consumption savings target is a meaningful way to support sustainable, affordable, multifamily rental housing around the country.

We are sharing many technical details with you today because in times of transition, it is important to give as much information as possible on how your deals, now and in the future, will be affected by this change. If you have additional questions, please don't hesitate to reach out to your Fannie Mae Deal Team.

What does this guidance mean?

  • Fannie Mae is still in the Green Financing Business -- and we're all in!
  • There's no disruption to our processes -- Fannie Mae has already integrated this change from our regulator.
  • Our Green Rewards product still has the most competitive pricing in the market.

How will non-delegated Green Rewards deals be treated moving forward?

  1. Have an outstanding, unexpired quote, but the borrower has opted to target at least 20% energy or 20% water consumption savings, but less than 25%? Existing quoted pricing will be honored. When the loan is delivered in 2018, the deal will count towards the 2018 Cap.
  2. Need a new quote? The deal must project at least 25% energy or 25% water consumption savings in order to use the Green Pricing Grid that went into effect on November 29, 2017, which remains unchanged and is currently significantly lower than conventional pricing.
  3. Have an expired quote, but the borrower has opted to target at least 20% energy or 20% water consumption savings, but less than 25%? Discuss meeting the 25% energy or 25% water consumption savings with your borrower and HPB Consultant, and submit the loan for evaluation with your Fannie Mae Deal Team. Our pricing desk will evaluate each deal on a case-by-case basis. To start this evaluation:
    1. Enter a request for Pricing Waiver in DUS Gateway® marked as: Delegated: No; Category: Pricing/Fees; Sub-category: G&S fee reduct. below curr. pricing memo;
    2. Discuss the circumstances of the deal in the Description for Fannie Mae Quote field; and
    3. Upload application letter with the Borrower into DUS Gateway Deal Docs.

How will delegated Green Rewards deals be treated?

  1. Have a deal with a confirmed Commitment, but the borrower has opted to target at least 20% energy or 20% water consumption savings, but less than 25%? Any delegated deal with a confirmed Commitment Date prior to November 29, 2017 will be honored at the quoted price.
  2. Have a deal with an issued application but the borrower has opted to target at least 20% energy or 20% water consumption savings, but less than 25%? For applications issued prior to November 29, 2017, please enter a Pricing Waiver in DUS Gateway. Fannie Mae will process the waiver at Green Grid equivalent pricing for up to 60 days after the date of the loan application letter. To start this process:
    1. Enter a Pricing Waiver in DUS Gateway marked as: Delegated: No; Category: Pricing/Fees; Sub-category: G&S fee reduct. below curr. pricing memo
    2. Discuss circumstances of deal in the Description for Fannie Mae Quote field
    3. Upload application letter into DUS Gateway Deal Docs

How will these deals be disclosed to MBS investors?

Any deal being delivered for the remainder of 2017 or in 2018 that qualified as a Green Rewards Mortgage Loan at Rate Lock by projecting at least 20% savings in energy or 20% water consumption (or which received an approved waiver from Fannie Mae) will be disclosed as a "Green MBS".

How does this impact the HPB Reports?

There is no change to the HPB Report, site visit process or other activities conducted by the HPB Report Consultant. The consultants should still look for all energy and water saving opportunities at the property.

Will the HPB Report cost be reimbursed?

Fannie Mae will reimburse the entire cost of the HPB Report if the security is disclosed as a Green MBS.

What about Green Building Certified deals?

Fannie Mae is still quoting Green Building Certified deals. The 2018 Cap Exclusion remains unchanged for Green Building Certification deals. They are 50% excluded when at least 20% but less than 50% of the units are affordable, and 100% excluded when 50% or more of the units are affordable.

Updated marketing materials that reflect this change can be found here.

Thank you and I look forward to all that we will continue to do to positively impact rental housing and the environment, together, with you as our partners.

Best,

Bob