FHFA Released New Green Lending Requirements for 2019
On November 6, 2018, the Federal Housing Finance Agency (FHFA) announced that the 2019 multifamily lending caps for Fannie Mae and Freddie Mac (the Enterprises) will be $35 billion for each Enterprise, unchanged from the 2018 caps.
Additionally, the FHFA set new requirements for exclusion from the multifamily cap loans that finance energy- or water-efficiency improvements through Fannie Mae’s Green Rewards and Freddie Mac’s Green Up/Green Up Plus programs.
Click here for the official press release.
To qualify for 2019 loans:
- Multifamily loans that finance energy- or water-efficiency improvements must project a minimum 30% reduction in whole property energy and water consumption, and a minimum of 15% of the reduction must be in energy consumption.
- Borrowers must engage a third-party collection firm to meet the data collection requirements.
What this means:
A property could be projected to save, for example, 15% energy and 15% water, or 18% energy and 12% water, or just 30% energy. By contrast, 18% water and only 12% energy, or 30% water alone, will not meet the lending requirements.
The data requirement refers to reporting of utility data for the lifetime of the loan (Fannie Mae) or 4 years after the loan closes (Freddie Mac). Nova can assist with this requirement.
Impact to timing/deliverables:
- Fannie Mae and Freddie Mac will work with lenders to determine how individual deals are impacted by the change.
- Fannie Mae will release a new 4099H form that will be used immediately upon release.
More details will be available after the FHFA publishes the 2019 Scorecard.
Impact to borrowers and measures to achieve savings:
Following the increase to 25%, the savings threshold for 2018, many properties saw more 1.25 GPM showerheads, ultra-low-flush toilets, and higher cost irrigation/landscaping improvements or appliance replacements recommended when aiming to achieve the water threshold. Borrowers will likely have more flexibility when considering options for water measures, with toilets more often required only if older, high-flush toilets are in place. For many properties, energy savings will be achieved through low-hanging fruit, such as lighting. For some projects, borrowers will need to consider other energy-saving measures, such as appliances and HVAC or hot water systems.
VP, Strategic Energy Group
Nova Consulting Group, Inc.