W&D Affordable Team Closes One of the Largest SDW Deals to Date

Walker & Dunlop was Fannie Mae’s top multifamily lender by volume in 2022 (as we have been for 9 of the last 11 years), and now our company has added another feather to its cap—the largest SDW lender by loan volume and number of units delivered to date.

Fannie Mae’s Sponsor-Dedicated Workforce Housing Program, or SDW, is an example of its mission to continue providing access to affordable rental housing in America. It’s no secret that skyrocketing home prices have prevented many would-be buyers from purchasing a home. Apartment rents are also climbing—in fact, 2021 saw a 10 percent increase in the national rent levels, with some states like Georgia seeing twice that increase.

In response, Fannie Mae and Walker & Dunlop’s Affordable Team are helping to put housing within the reach of more families and individuals. Here’s a closer look at one of Fannie Mae’s biggest SDW deals closed to date.

What is Fannie Mae’s SDW Program?

In 2023, Fannie Mae launched a new product initiative that supports workforce housing, the Sponsor-Dedicated Workforce Housing (SDW). This program provides pricing and underwriting benefits to borrowers who agree to create a rent ceiling on a certain number of units.

There are no income restrictions; rather, a minimum of 20 percent of the rental units must be offered at affordable rates for residents earning up to 80 percent of the area median income (AMI). Or, in high-cost-burdened metro areas, rates could reach up to 100-120 percent of AMI. This program provides benefits for the renter as well as the owner or developer.

Borrowers maintain rent restrictions for the life of the loan, providing much-needed support to workforce-income tenants. As a Fannie Mae lending partner, Walker & Dunlop will monitor these properties each year for rent compliance.

The program is designed in hopes that Fannie Mae and its partners can create more affordable rental units for the workforce, while providing long-term, stable housing options. Fannie Mae is doing its part by offering competitive lending rates, certainty of funding, and efficient underwriting so that borrowers can readily take advantage of its benefits.

Deal Details: Preserving Affordable Housing in Chicago

The W&D Affordable Team’s Ryan Smith, Senior Director, and Betsy Blau, Associate Director, closed one of Fannie Mae’s largest SDW financings earlier this year with the refinance of Green Oaks Apartments, a 384-unit property in the Chicago MSA.

We worked with one of our long-term clients who is well-versed in affordable housing programs and uses very experienced property management firms that can seamlessly handle rent certifications, required by the SDW program. including income tests, rent qualifications, and third-party management of affordable deals. This deal aligned perfectly with Fannie Mae’s SDW program because of our client’s rent certification compliance experience.

The SDW program stands to provide long-term benefits throughout the communities in which it’s executed. One advantage of the program is that you’re not capping your rents on a one-time basis and then increasing rents in the next 2-3 years. The program’s stipulations help groups commit to preserving their properties for the next ten years.

Because SDW is a new program, our W&D team was on the frontlines of new forms and loan documents that developed as we moved through the deal. Our attorneys were among the first few to negotiate waivers and provisions with Fannie Mae and spearhead this program.

As one of the top Fannie Mae lenders in the country, Walker & Dunlop was able to provide a seamless experience throughout the process. Working with a dedicated team with strong Fannie Mae experience can speed up deals and reduce complexities that owners and developers may have experienced in the past.

Based on this deal and our longstanding experience in affordable housing, the SDW program was a great fit for our client because of their interest in expanding their affordable housing portfolio across the affordable income spectrum.

Let Walker & Dunlop Help You Build Your Affordable Portfolio

Walker & Dunlop applauds Fannie Mae’s creation of the SDW program. This program fills a critical need in communities. Affordable housing and workforce housing continue to be top challenges in creating thriving communities.

We predict that the focus on affordable housing opportunities will be a consistent factor throughout 2024, and Fannie Mae’s SDW program provides direct incentives to the borrower as well as the renter. The tenant’s rent level will be maintained at a true affordable rental level. SDW provides built-in incentives to the borrowing community, including better pricing, the potential for longer amortization, and increased interest-only terms, among other perks.

The Green Oaks Apartment deal supports workforce housing while illustrating how Walker & Dunlop is uniquely able and willing to help other clients create similar opportunities within their respective communities.

Reach out to our affordable experts to learn how you can leverage Fannie Mae’s SDW program for the greater good.