Making an Impact in the Face of Market Headwinds
Last week, Freddie Mac Multifamily held our Impact Summit, where we convened some of the brightest minds in the industry to talk about the challenges lenders, servicers, borrowers and renters are facing in this rental market. It was a thorough, insightful conversation, and there was plenty to talk about.
For example, throughout 2023, the industry has been challenged by a combination of factors, such as high interest rates, rising insurance costs and, in some markets, oversupply. Renters, on the other hand, are dealing with severe affordability issues, a lack of supply in the home purchase market and property condition issues, to name a few.
Although the outlook is challenging and the road ahead bumpy, our team at Freddie Mac remains committed to being a reliable partner with you.
Our mission and role, especially in uncertain times, is to be a countercyclical provider of liquidity and stability. We know Freddie Mac will remain open to do business even — and especially — when others are pulling back. In good economic times and bad, we are financing properties in every market, across every corner of the country, every day. That is the role we were created to fulfill.
Below are some of the other areas we’re focused on to improve the experience for tenants and the industry alike:
Ensuring Quality Property Condition
We are enhancing our portfolio surveillance to ensure that units are not only affordable, but that tenants have a safe, healthy and well-maintained home. It’s the right thing to do for tenants and for our industry.
The fact is that most properties are well-maintained. However, when issues arise, we are committed to working with our sellers, servicers and sponsors to responsibly identify those issues, address them with a sense of urgency and ensure the properties remain in good, livable condition for the long-term. To that end, we recently announced new requirements around timely and quality reporting, and are strengthening our surveillance team. We want to work together, across the industry, to have consistent, rigorous standards that will promote better housing conditions for families.
Rent payments are often the largest monthly payment families make, but historically these payments have not been reported to the major credit bureaus. But by adequately reporting these payments, we can put families in a stronger financial position and on a path to a better future.
In November 2021, we took steps to accomplish this by launching our credit-building initiative. The initiative helps renters build credit by encouraging operators of multifamily properties to report on-time rent payments to the three major credit-reporting bureaus. And just recently, Freddie Mac expanded a program that offers one year of free services to our sponsors and lenders. Thus far, more than 375,000 renters have enrolled in the program. Of those, more than half saw their credit scores increase and 35,000 now have a credit score for the first time.
Our work to promote equity in our industry has a downstream effect on the tenant experience. This work opens a pathway to develop new ideas, new opportunities and new ways of doing business, and I would highlight two Freddie Mac programs that are making a difference in this way.
First, our Develop the Developer program, which inspires reinvestment and development of affordable housing, unleashed hundreds of millions of dollars in grants and financing for 72 brand new developers to work in historically underserved communities in its first two years.
And second, the Freddie Mac-sponsored Diverse and Emerging Borrower Steering Committee, which works to advance inclusivity within the multifamily industry, is making real change. Composed of industry participants, the group’s willingness to work with us to mitigate risk so we could responsibly expand our policies around liquidity standards is making a difference. But there’s more work to do.
Our Priorities for the Years Ahead
Taken together, our work to promote quality property conditions, build credit and advance equity will help make a real impact for tenants throughout this country. At the same time, those are just a few of the actions we’re taking to ensure we can support the industry and expand access to affordable housing that is safe and well-maintained. To that end, we are focused on the following impact-centric priorities:
- Strengthening further our Targeted Affordable Housing offerings in support of low- and very low-income housing.
- Finding innovative ways to preserve affordability, through offerings such as our Tenant Advance Commitments, which helps borrowers preserve affordable rents and provide supportive services to their tenants.
- Expanding workforce housing through our Small Balance Loan portfolio.
- Supporting manufactured housing, rural housing and affordable housing preservation through our Duty to Serve plan.
Finally, let me reiterate that we cannot make an impact without our lenders, servicers and sponsors, who are on the front lines of many of these issues. Now more than ever, as market challenges and economic headwinds persist, we stand ready to work with you. By working together, we can provide stability and liquidity to the market while delivering quality, affordable homes to families across the country.
©2023 by Freddie Mac.
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