Cites Agency's Record Lending Years and Successful Homeownership and Multi-Family Lending Programs
Moody's Investors Service has released a report stating MassHousing is in strong financial position based on the Agency's most recent lending of $1.5 billion in fiscal 2016 and the success of its homeownership and multifamily lending products.
"MassHousing (rated Aa3, stable) has experienced another record year of lending, financing $1.5 billion in affordable housing through its diverse range of loan products. The volume of loan originations contribute to the growth of MassHousing's balance sheet while supporting their mission of affordable housing," the report stated.
Overall in fiscal year 2016, MassHousing produced $1.5 billion for affordable rental and for-purchase housing involving nearly 10,000 thousand families across Massachusetts. The Agency's fiscal year ran from July 1, 2015 to June 30, 2016. The Agency fell just shy of its record-setting lending total of $1.6 billion in fiscal year 2013.
The Agency lent $782.9 million for affordable rental housing, shattering the previous high of $452.3 million in fiscal 2011 by 73%.
The record total was largely a result of new loan products for the owners and developers of multi-family housing that offered lower interest rates in the low-to-mid 3% range and enhanced customer service. MassHousing provided loans for 40 rental housing communities involving 6,110 apartments. The 40 loans tied the amount produced in fiscal 2004.
"We are pleased that Moody's recognized MassHousing's commitment to providing better loan products and services to our borrowers and business partners as the major factor for the success we had in fiscal 2016 in helping thousands of Massachusetts residents find a quality, affordable home to live in," said MassHousing Executive Director Tim Sullivan.
Two new loan products in particular fueled the record level of lending for rental housing.
MassHousing offers the Multifamily Accelerated Processing (MAP)/Ginnie Mae Joint Venture Initiative through the U.S. Department of Housing and Urban Development (HUD) to the owners of rental housing communities, which provides lower interest rates and a faster review process while preserving and extending affordability for hundreds of low-income senior citizens and families. The Agency has partnered with two well-known and experienced MAP lenders: CBRE and Rockport Mortgage Corporation.
The Agency also offers a loan program through the Federal Financing Bank (FFB). The FFB program resulted from a partnership established in 2015 with the U.S. Department of the Treasury, HUD, and state Housing Finance Agencies (HFAs) including MassHousing. That partnership, in which the FFB purchases a 100% participation interest in the loan that is 100% insured by HUD, provides lower interest rates on loans to owners of subsidized rental housing, giving them new incentives to refinance, make capital improvements and lock in long-term affordability for lower income residents.
MassHousing produced 12 loans totaling $262 million in financing through the FFB program and 10 loans totaling $183 million through the MAP/Ginnie Mae program. Overall, the new loan programs accounted for 57% of the rental lending production in fiscal 2016.
"MassHousing has been at the forefront of the new Treasury/Federal Financing Bank and HUD partnership," Moody's observed in its report, also noting that "the Multifamily Accelerated Processing (MAP) program (is) also being widely used by MassHousing. Under this program, approved MAP lenders have quicker approval processes aimed to cut the time required to approve loan applications."
Sullivan said that changes in how affordable housing is financed have resulted in MassHousing being more innovative and customer focused.
"MassHousing made a commitment to provide new, borrower-friendly products with better executions for our customers and that is reflected by the record level of financing the Agency provided for multi-family housing and more importantly, the low- and moderate-income residents who live in those communities," he said.
MassHousing's Homeownership Division produced $656.3 million in lending in fiscal 2016. The Agency closed 2,854 loans to low- and moderate-income borrowers who purchased or refinanced a home in 273 of the Commonwealth's 351 cities and towns. Of those loans, 36% percent were used by consumers in Gateway Cities.
"MassHousing used a variety of loan and bond programs to finance these loans," the Moody's report stated.
Read the Moody's report.