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How Multifamily Creates Value: A Progress Report

Multifamily SVP David Brickman Since one-third of Americans rent rather than own their home, Freddie Mac has a vibrant business focused on the multifamily marketplace. Here, we work with a variety of business partners – lenders, borrowers, and securities investors – to finance affordable housing for renters nationwide. How are we doing in terms of creating value for these stakeholders as well as the U.S. taxpayers who capitalize Freddie Mac?
Read on.

Taxpayers Benefit from Multifamily Net Income

At $942 million, multifamily earnings accelerated in the first half of 2012, and were almost equal to all of 2010. Since 2010, Freddie Mac’s multifamily business has produced $3.2 billion in net income for U.S. taxpayers.

Taxpayers Benefit from Multifamily Net Income

Source: Freddie Mac

Renters Benefit from Affordable Housing

During the first half of 2012, multifamily financed rental housing for 193,000 families. The vast majority of our loans supported affordable housing for people at or below the local area median income. Since 2010, Freddie Mac's multifamily business has financed almost 750,000 units of rental housing.

Renters Benefit from Affordable Housing

Source: Freddie Mac

Lenders and Borrowers Rely on Multifamily Liquidity

At $12.4 billion, multifamily loan purchases in the first half of 2012 enabled borrowers to refinance loans at lower rates and support new apartment construction. Since 2010, Freddie Mac's multifamily business has funded $47.5 billion in loans. We estimate that our share of multifamily mortgage debt outstanding is 13 percent.

Lenders and Borrowers Rely on Multifamily Liquidity

Source: Freddie Mac

Our Securities Create Opportunity for Investors

Since 2008, the CMBS market has been dormant. One exception: Freddie Mac's multifamily K-certificates. During the first half of 2012, multifamily settled $10 billion in mortgage-backed securities. Since 2010, we have settled 26 K-deal offerings totaling $30 billion. To protect taxpayers, our securities transfer risk – both interest rate and credit – to investors.

Our Securities Create Opportunity for Investors

Source: Freddie Mac

Our Credit Discipline Shields Taxpayers from Risk

Through June 2012, multifamily’s loan delinquency rate was just 27 basis points. In contrast, the delinquency rate on non-Freddie Mac loans in commercial mortgage-backed securities was 1,057 bps – almost 40 times worse. On a loan portfolio of $123 billion, Freddie Mac's multifamily credit losses during the first half of 2012 were just $11 million.

Our Credit Discipline Sheields Taxpayers from Risk

Source: Freddie Mac


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