Meeting our Mission in a Turbulent Year for Multifamily
Every year, Freddie Mac Multifamily vigorously pursues its mission of providing liquidity, stability and affordability to the rental market. I’m pleased to report that we met our goals under each of our objectives last year in what was a turbulent housing market from start to finish.
In 2022, we delivered over $73.8 billion in financing and Low-Income Housing Tax Credit (LIHTC) equity investments in a volatile market, driving forward and providing support as some others pulled back when conditions became more challenging.
I’m most proud of our work enabling affordable housing. During a time marked by record rent increases and rising rates, we aggressively used our place in the secondary mortgage market to support this vital sector.
In 2022, our annual financing of Targeted Affordable Housing, which uses government programs to keep rents affordable, increased by nearly 60% to $15.3 billion. Agency support for this market is critical to its stability, and in 2022, these loans represented a greater proportion of our business than ever before.
More broadly, Freddie Mac exceeded all its Multifamily affordable housing goals, as set by the Federal Housing Finance Agency (FHFA). More than 420,000 of the units we financed through loan purchases were affordable to low-income households, surpassing the 415,000-unit goal. Put another way, nearly three-quarters of the units we financed and counted under the goals were affordable to renter households earning up to 80% of area median income (AMI).
We achieved nearly 1.5 times our goal to finance rental units affordable to very low-income families. In fact, we financed nearly 128,000 units affordable to these households, which earn up to 50% of AMI. Financing these deeply affordable units is extremely challenging, so we are particularly proud of this accomplishment. Freddie Mac also achieved 118% of its low-income housing goal for properties with 5 to 50 units with over 27,000 units.
We also exceeded the FHFA's annual scorecard requirement that at least 50% of our business support mission-driven, affordable housing by hitting 69% in 2022.
Now all this work is good, but there’s still more to do. Our nation continues to face an affordable housing crisis. Although rents are now falling in nearly two-thirds of the top 50 rental markets, they rose at a record pace from 2021 to the third quarter of 2022. The long-run rental supply shortage, paired with inflationary pressures, has squeezed the budgets of millions of American renters and made it a challenge for many to find housing at all.
We believe that our financing is one of the greatest sources of affordability in the multifamily marketplace, but we’re looking deeper into our mission to address our big-picture supply challenges and advance tenants’ interests.
Freddie Mac Multifamily is ramping up its work in support of new supply as well. We provided a record $1.9 billion in forward commitments, supporting 20,000 future new or rehabilitated affordable housing units. We expect to support the addition of 74,000 units through forwards by 2025. These agreements provide greater certainty to construction lenders and housing developers by limiting risks they face when executing complex multifamily deals in volatile markets.
Freddie Mac also made nearly $1 billion in LIHTC equity investments last year to support new housing units in the most overlooked and underserved markets. And because a key part of supporting housing supply is maintaining the existing stock, $1.6 billion in loans we purchased were designed to support the rehabilitation of over 11,000 housing units nationwide.
Also, to increase opportunities for renters, we accelerated our renter credit building initiative, which has now onboarded more than 150,000 tenant households, helping more than 20,000 renters establish credit scores for the first time.
With our Tenant Advancement Commitment, Freddie Mac was the first to market with an initiative designed to preserve rents at affordable levels through our loan agreements where there is no regulatory requirement to do so. Today we’re proud to have reached a total of $1.5 billion through this offering.
Freddie Mac also pioneered tenant protections for renters of manufactured housing community (MHC) pads. Last year, nearly 20,000 additional MHC residents benefited from these protections, which were designed to address the unique challenge faced by those who own their home but rent the land on which it sits. And to recognize owner/operators who have been prioritizing tenants all along, Freddie Mac also created our new Impact Sponsor of the Year Award.
These are only a few of the countless efforts we undertook in 2022, and we’ve got more in store for the years ahead. Last year, we published our first Equitable Housing Finance Plan and our second Duty to Serve plan, each of which outline a series of new objectives.
After just eight months at the helm of Freddie Mac’s Multifamily business, I can say with certainty that our team comes to work every day wanting to do more to address the nation’s housing challenges. I’m proud of everything this team did to advance our mission this past year, and I’m looking forward to all we have in store.
©2023 by Freddie Mac.
Transcript: Freddie Mac CEO and CFO Discuss First Quarter 2023 Financial and Business Results
Michael DeVito, Chief Executive Officer
Christian Lown, Executive Vice President and Chief Financial Officer
Making an Impact Through Innovative Financing and Investor Transparency
Robert Koontz, SVP Multifamily Capital Markets