In an effort to combat the affordable housing crisis, Fannie Mae has introduced a new platform aimed to preserve naturally occurring affordable housing (NOAH). The ambitious concept, Sponsor-Initiated Affordability (SIA), includes new pricing incentives for property owners who agree to both rent and income restrictions for residents of their existing conventional workforce housing – targeting units that are already affordable.
The SIA incentives, in the form of lower borrowing costs, would 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 would be documented in an affordability agreement and require annual certification.
Rob Levin, Senior Vice President of Multifamily Customer Engagement, Fannie Mae, told Mortgage Professional America why it is critical to appeal to the market-rate sector to keep units affordable: “These units are coming under intense pressure as rent price growth far outpaces income. Where traditional solutions have revolved around government sponsorship of renters, or a voucher system, this incentive approaches the issue by targeting the borrower and making an economic case for them to maintain some units at an affordable level.”
Levin adds, "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. 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."
As a Top 10 provider of Fannie Mae affordable housing loans through the Delegated Underwriting and Servicing (DUS®) network, Greystone is an expert in various affordable housing lending options, ranging from acquisition and construction financing to affordable housing recapitalization and development management.
For more information on Fannie Mae’s SIA program, download Greystone’s term sheet here.