Fannie Mae has recently launched new Sponsor-Initiated Affordability (SIA) incentives for multifamily borrowers. The move is part of the agency’s efforts to address the lack of quality affordable multifamily housing nationwide. Some 20.4 million renter households paid more than 30 percent of their incomes towards housing in 2019, a number that is expected to be amplified by the COVID-19 pandemic.
The new program encourages Fannie Mae DUS® borrowers to set rent and income restrictions in conventional workforce housing in exchange for lower borrowing costs. SIA incentives will be available for borrowers that preserve or create a minimum of 20% of units for renters earning less than 80% of area median income (AMI), adjusted for family size, over the life of a loan, with rents not exceeding 30% of AMI. An affordability agreement will be required annually for 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.”
For more information, please download our Fannie Mae Sponsor Initiated Affordability term sheet or contact a Lument originator.