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Multifamily on a Roll

Multifamily SVP David Brickman In a recent survey, three out of four lenders responded that apartments are the best property type for investment opportunities today. Those results from the National Real Estate Investor's annual Borrower Trends survey aren't surprising, but they do highlight the fact that multifamily, and the rental housing market more broadly, is a much-needed bright spot in real estate and the economy.

The multifamily market is becoming more important than ever as more homeowners shift to rental housing either by choice or by need. Policymakers and housing-industry leaders have realized that homeownership isn't – and probably shouldn't be – every American's dream. Renting is the right option for a growing portion of the population, and the need for rental housing is increasing rapidly, as is the demand for capital to support this growth.

Freddie Mac is front and center in this new paradigm. Not only are we providing leadership, but we are also taking action to move the industry, the market, and our company forward. We are financing approximately one-quarter of a growing rental market, which includes financing for student and seniors housing, workforce housing, and targeted affordable housing. We also securitize more than three-fourths of those loans, thus helping to fuel the growth in the capital markets for agency multifamily related securities.

Our strong support of the multifamily market – and the nation's renters – is evidenced by our $20.3 billion in multifamily volume last year, which provided financing for approximately 1,300 properties amounting to 321,000 apartment units. The majority of these apartments are affordable to families of modest means.

In addition, our securitization model has made Freddie Mac among the largest sellers of structured credit in the U.S. capital markets. Through our securitizations, we are reducing risk to taxpayers and bringing private capital back to the market – two goals for the future housing finance market set forth by the Treasury Department and the Department of Housing and Urban Development in their February 2011 report to Congress. In 2011, we securitized $13.7 billion in mortgages underlying 12 new multifamily mortgage-backed securities transactions. This year, we've already marketed two $1 billion K-Certificate offerings and expect to continue to be a regular and consistent issuer.

We also took steps to increase transparency in our disclosures for investors by making available free of charge our new Mortgage Securities Investor Access tool that makes it easier to monitor the performance of our K-Deals. This new tool saves investors and analysts time by providing easy access to all post-securitization data from investor reporting packages for the securities underlying the related series of K Certificates. In addition, we have continued to expand the loan-level disclosures regarding the historical performance of our portfolio by providing loss information for defaulted loans. This was released last month on our website and should enable investors and analysts to better understand our historical credit performance.

On the mortgage purchasing side of our business, we are making improvements that will help lenders and mortgage servicers do business with us. While it's only the second month of the year, we've started off strong by introducing an online Insurance Compliance Tool that automates the submission of various insurance forms. We also fully implemented our new Early Rate Lock capabilities, and deployed our new origination and underwriting system that enables faster deal analysis, pricing, and underwriting.

I'm looking forward to another great year in which we will continue to provide liquidity to the multifamily market that will be essential to addressing the country's rapidly increasing demand for rental housing.


Note: Brickman provided additional insights about the industry during a December interview with trade magazine Apartment Finance Today. Topics included managing in an uncertain environment, interest rates, and the market outlook. 


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