Green financing: The new value add

When the Federal Housing Finance Agency (FHFA) announced that 2019 lending caps would remain unchanged at $35 billion for each GSE, the agency also released updated parameters for green financing programs. Since Fannie Mae and Freddie Mac’s uncapped, environmentally-focused programs were first introduced, green originations have grown significantly. In 2017 alone, the GSEs financed a total of $36.6 billion in green loans, which equates to more than each of the agencies’ total allowable capped business for the year.

The benefit of green loans

Though the FHFA announcement increases energy and water savings requirements for green financing, it underscores the market’s enthusiasm for this lending option and reiterates the agency’s commitment to environmental improvements within the multifamily sector. Among their many benefits, green loans offer rate discounts between 30 and 35 basis points, incentivize owners and operators to reinvest in the existing stock of multifamily properties, and effectively reduce operating costs. In addition to the environmental and cost savings, this financing solution promotes an attractive, more affordable housing option for renters.

Green financing at Walker & Dunlop

Having completed nearly $11 billion in green financing from January 2016 through September 2018, Walker & Dunlop has witnessed investors’ eagerness to capitalize on this market opportunity. We have also seen creative applications for this product type, financing the very first green Fannie Mae loan backed by a senior housing property in 2017.

If you’re interested in going green, our team of experts is ready and available to help you navigate both the Fannie Mae Green Rewards and Freddie Mac Green Advantage programs.

To read more about the trends we are seeing in the multifamily space, download our Quarterly Multifamily Report.