Freddie Mac announced it is gearing up to enter the rental market, however unlike Fannie Mae’s approach, Freddie will focus on affordable housing.
Earlier this year, Fannie Mae upped its game in the multifamily sector with its agreement to backstop up to $1 billion in debt for Invitation Homes, the largest owner of single-family rental homes in the U.S.
Freddie Mac explained its goal is to provide tens of millions of dollars in financing to midsized landlords or even nonprofits, according to an article by Matthew Goldstein for The New York Times. The GSE could provide up to $1 billion in financing or loan guarantees to smaller firms with affordable housing rentals.
From the article:
“It is, first and foremost, affordable,” said the official, David D. Leopold, a Freddie Mac vice president for targeted affordable sales and investments. “The size of the sponsor is less important than affordability.”
Freddie Mac is still hashing out many of the details of the plan, but Mr. Leopold said the company hoped to announce the first deal within 90 days.
The Federal Housing Finance Agency approved of the plan on a trial basis, the article stated. Back in 2012, the agency fought against Freddie Mac’s plan to provide financing to buyers of foreclosed homes, saying it could encourage home flipping.
The article explains that while Freddie Mac’s plan is a response to the criticism to Fannie Mae’s approach, there is also another reason for its strategy.
From the article:
The strategy also stems from a growing consensus among housing policy makers and landlords that both Freddie Mac and Fannie Mae should play roles in providing financing to single-family home operators. The market has grown since the collapse of housing prices a decade ago touched off the worst financial crisis since the Great Depression and led to more than six million completed foreclosures.