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GSE’s 2022 Multifamily Housing Goals Represent Significant Increases over 2021

Published by Peter Lawrence on Tuesday, January 11, 2022 - 12:00AM

To better promote housing equity, on Dec. 22, 2021, the Federal Housing Finance Agency (FHFA) published a new final rule for Fannie Mae and Freddie Mac (the housing government-sponsored enterprises, or GSEs) determining both their 2022 multifamily housing goals and 2022-2024 single-family housing goals.

The new rules represent a marked increase over 2021 levels. Furthermore, these new GSE goals will make debt for affordable housing less expensive and facilitate affordable rental housing financing, especially as the COVID-19 pandemic has made the affordable housing crisis worse.

The GSEs, through their mortgage purchases, support the multifamily and single-family housing debt market, especially for affordable housing. Fannie Mae and Freddie Mac do this “by increasing the liquidity of mortgage financing for families with very low, low, and moderate incomes,” through rules established by FHFA, as required by the Financial Safety and Soundness Act of 1992.

Multifamily Goals

In a departure from previous practice, the FHFA final rule provides multifamily goals only for 2022 in response to public comments discussing the impacts of the COVID-19 pandemic on multifamily housing and how there may be long-term effects on the multifamily market for years to come. Typically, FHFA has set these goals for three years. Rather than set multifamily benchmarks for 2023 and 2024 amidst the market uncertainty engendered by the pandemic, FHFA has decided to propose a new rule later in 2022 to set the GSEs’ 2023 multifamily home goals. By limiting the multifamily goals to only 2022, FHFA can then use the most recent data available when setting its 2023 goals later this year, data that should incorporate any significant changes caused by the COVID-19 pandemic and account for potentially changing market dynamics.

The different GSE goals for multifamily properties for 2022 and the comparison with their 2021 goals are listed in the chart below:

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The GSE 2021 goals were significantly less than the GSE 2022 goals due to the pandemic. Further, Freddie Mac’s Small Multifamily Low-Income Subgoal is greater than Fannie Mae’s because Freddie Mac has historically significantly outperformed Fannie Mae within this subgoal.  The GSE’s multifamily performance from 2016-2020, which influenced their 2022 goals, can be seen below:

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FHFA set the goal at 415,000 homes because the GSEs have historically almost met or exceeded this number of homes, making this a reasonable and achievable goal. Freddie Mac specifically said they agree with this goal and find it attainable during the comment period before the rule was finalized. FHFA also set different Small Multifamily Low-Income subgoals for Fannie Mae and Freddie Mac, as Freddie Mac has normally outperformed Fannie Mae and exceeded this goal and FHFA expects Freddie Mac to do so again. Fannie Mae issued a public comment expressing some concern for this subgoal and suggested that it may need to change some of its business standards to meet this goal. Despite these concerns, small multifamily homes are crucial in the affordable housing market and FHFA’s data suggests that these homes were significantly affected by the COVID-19 pandemic in 2020, making the GSEs’ goals essential to reviving this market. FHFA set these goals in accordance with the current housing market and the requirements of the Financial Safety and Soundness Act of 1992.

Many commenters stated that the multifamily goal increase was necessary because of the growing need for affordable rental housing. FHFA recognized that affording rental housing is becoming more difficult for many families. They noted that between 2004-2019, apartments with rents $1,000 per month or greater increased by 10.4 million homes while apartments with rents $600 or lower decreased by 2.5 million homes. They further noted that about half of all renter households were housing cost burdened in 2019 because they were spending 30% or more of their income on housing. The affordable housing crisis predates the pandemic and significantly increasing the multifamily goals for the GSE will help to mitigate this crisis.

Single-Family Goals

The FHFA also listed the different benchmark goals for GSEs for single-family homes. While the benchmarks did increase for 2022-2024 compared to 2021, there was not a large increase. The single-family goals will potentially affect the Neighborhood Homes Tax Credit, which is currently a part of the Build Back Better Act.

The chart below lists the 2022-2024 benchmarks compared to the 2021 benchmarks:

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Single-family goals have increased for 2022-2024 since the GSEs have historically met or exceeded their goals:

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Fannie Mae and Freddie Mac are Instrumental in Providing Affordable Housing

In addition to meeting and exceeding the multifamily goals set by FHFA, the GSEs provide affordable housing through different means, including purchasing loans on properties participating in HUD’s Rental Assistance Demonstration program, making LIHTC equity investments, preserving and rehabilitating multifamily properties, and providing workforce housing. The GSEs also provide affordable housing and help underserved communities by requiring 50% of their loan purchases to support mission-driven, affordable homes.

Rural housing is one of the underserved markets that the GSEs are required to serve, as mandated by their Duty to Serve (DTS) statutory requirement. The DTS mandate requires the GSEs to serve rural housing, manufactured housing and affordable housing preservation, all of which are traditionally underserved markets. The GSEs have released their 2022-2024 DTS plans, but FHFA announced an objection to these plans Jan. 5, stating that the GSEs need to revise their plan to meet the DTS mandate’s no-objection standard.

Though not a part of the DTS mandate, on Sept. 1, 2021, the FHFA announced that they would increase the GSE LIHTC investments in LIHTC to $850 million each annually and that half of these equity investments had to be for mission-driven housing, a 10% increase. These mission-driven housing investments include rural rental housing, higher leverage or higher risk preservation properties, supportive housing properties, and mixed-income new construction properties. More information about the GSEs’ LIHTC equity investments can be found in this previous Notes from Novogradac post.


These new goals will help to mitigate the affordable housing crisis in the United States, which predates but was made worse by the COVID-19 pandemic. By addressing the needs of underserved communities and investing in loans for mission-driven housing, the GSEs are a vital tool in providing affordable housing. Further, setting multifamily goals for only 2022, instead of multi-year goals, will give FHFA the flexibility to utilize the most recent data when setting future goals so that the GSEs’ goals can more effectively mitigate the affordable housing crisis.

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