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Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules period, FHFA also took into account the PSPA limit on each Enterprises multifamily mortgage acquisitions, which is $80 billion over a trailing 52week period and requires that 50
percent of that amount be missiondriven mortgages, as determined by FHFA.38 Much of the analysis below describes trends in the overall multifamily mortgage market as they apply to setting the proposed benchmark levels. FHFA recognizes that these general trends may not apply to the same extent to all segments of the multifamily mortgage market.
Affordability in the multifamily mortgage market. There are several factors that make it difficult to accurately forecast the affordable share of the multifamily mortgage market.
First, the portion of the overall multifamily mortgage market that provides housing units affordable to low-income and very low-income families may vary from year-to-year.
Second, the competition between purchasers of mortgages within the multifamily mortgage market overall may differ from the competition within the affordable multifamily mortgage market segment. Finally, the volume for the affordable multifamily mortgage market segment also will depend on the availability of affordable housing subsidies.
FHFA determines affordability based on a familys rent and utility expenses not exceeding 30 percent of AMI.39
Using this measure, affordability for families living in rental units has decreased in recent years for many families. According to the Joint Center for Housing Studies JCHS, in its 2020
State of the Nations Housing Report, prior to 2020, the composition of housing stock had already negatively affected affordability. For example, the report stated that while housing stock grew by 7.5 million units between 2004
and 2019, most of these additions were in single-family rentals or properties with 20 units or higher, whereas the number of units in twoto four-unit buildings declined by 38,000 units. The units in larger multifamily buildings tend to have higher median rents.40 The supply of apartments with rents of $600
or lower declined by 2.5 million between 2004 and 2019, unlike apartments with rents of over $1,000, 38 See https home.treasury.gov/news/pressreleases/sm1236.
39 See 12 U.S.C. 4563c.
40 The State of the Nations Housing 2020, Joint Center for Housing Studies of Harvard University, December 2020, p. 32, available at https
www.jchs.harvard.edu/sites/default/files/reports/
files/Harvard_JCHS_The_State_of_the_Nations_
Housing_2020_Report_Revised_120720.pdf.

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which increased by 10.4 million units within the same time period, according to the JCHS report.
The JCHS study of the rental market noted the growing presence of costburdened renters in certain income segments. Although, in 2019, the share of tenants that paid more than 30
percent of household income for rental housing decreased, at close to 50
percent, that number was still high.
Specifically, the share of cost-burdened households with incomes between $25,000 and $74,999 increased between 2011 and 2019.41 This is significant because the housing goals statute defines affordability at the 30 percent threshold.42
The supply gap in affordable units combined with the prevalence of costburdened renters has led to an erosion of affordability, with fewer units qualifying for the housing goals. This affordability gap is also reflected in the falling share of the low-income multifamily units backing loans purchased by the Enterprises. While 77
percent of the multifamily units financed by mortgages purchased by Fannie Mae in 2011 were low-income, that share dropped steadily in the intervening years to 64 percent in 2017, rising to 69 percent in 2020. At Freddie Mac, the low-income share also peaked in 2011 and 2012 at 79 percent, and decreased gradually to 65 percent in 2017, rising to 71 percent in 2020.
Financing for affordable multifamily buildingsparticularly those that are affordable to very low-income familiesoften uses an array of state and federal housing subsidies, such as low-income housing tax credits LIHTCs, tax-exempt bonds, Section 8
rental assistance, or soft subordinate financing.43 Investor interest in tax credit equity projects of all types and in all markets has been strong in recent years, especially in markets in which bank investors are seeking to meet Community Reinvestment Act CRA
goals. Consequently, there should continue to be opportunities in the multifamily mortgage market to provide 41 The State of the Nations Housing 2020, Joint Center for Housing Studies of Harvard University, December 2020, p. 1, available at https
www.jchs.harvard.edu/sites/default/files/reports/
files/Harvard_JCHS_The_State_of_the_Nations_
Housing_2020_Report_Revised_120720.pdf.
42 See 12 U.S.C. 4563c.
43 LIHTCs are a supply-side subsidy created under the Tax Reform Act of 1986 and is the main source of new affordable housing construction in the United States. LIHTCs are used for the acquisition, rehabilitation, and/or new construction of rental housing for low-income households.
LIHTCs have facilitated the creation or rehabilitation of approximately 2.4 million affordable units since inception of the program in 1986.

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permanent financing for properties with LIHTCs during the 20222024 period.
Additionally, there should be opportunities for market participants, including the Enterprises, to purchase mortgages that finance the preservation of existing affordable housing units especially for restructurings of older properties that reach the end of their initial 15-year LIHTC compliance periods and for refinancing properties with expiring Section 8 Housing Assistance Payment contracts.
Availability of public subsidies.
Multifamily housing assistance is primarily available in two forms demand-side subsidies which either directly assist low-income tenants e.g., Section 8 vouchers or provide projectbased rental assistance Section 8
contracts, and supply-side subsidies which support the creation and preservation of affordable housing e.g., public housing and LIHTCs. The availability of public subsidies impacts the overall affordable multifamily housing market, and significant changes to historic programs could impact the ability of the Enterprises to meet the housing goals. The Enterprises also play a role in providing liquidity to facilitate the preservation of public subsidies, like expiring Section 8 Housing Assistance Payment contracts and LIHTC
properties reaching the end of the use restricted affordability period.
The need for public subsidies persists as the number of cost-burdened renters remains high, at over 20 million renter households in 2019.44 The Center for Budget Policy Priorities estimates that only one in four households eligible for federal housing assistance currently receives it.45
Certain public subsidies have been provided since March 2020 to help the affordable housing sector and lowincome households during the pandemic. The CARES Act provided supplemental unemployment benefits to help people pay their rent, but those benefits expired on July 31, 2020. In December 2020, the Consolidated Appropriations Act, 2021 reinstated supplemental unemployment benefits through March 14, 2021. In March, the American Rescue Plan Act of 2021
extended those benefits through September 6, 2021.
44 The State of the Nations Housing 2020, Joint Center for Housing Studies of Harvard University, December 2020, p. 6, available at https
www.jchs.harvard.edu/sites/default/files/reports/
files/Harvard_JCHS_The_State_of_the_Nations_
Housing_2020_Report_Revised_120720.pdf.
45 See https www.cbpp.org/research/housing/
more-housing-vouchers-most-important-step-tohelp-more-people-afford-stable-homes.

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