The California Association of Realtors called out Freddie Mac’s pending entrance into the single-family home rental market, saying the move goes directly against helping homebuyers.
The issue goes back to the end of July when Freddie announced it would follow a recent initiative from Fannie Mae. However, Freddie would have a bigger focus on affordable housing.
Fannie Mae jumped into the arena first earlier this year and agreed to backstop up to $1 billion in debt for Invitation Homes, the largest owner of single-family rental homes in the U.S.
The decision, however, drew a lot of backlash from industry advocates, as an article by Matthew Goldstein for The New York Times.
Goldstein stated, “Housing advocates and legislators questioned why the landlord, Invitation Homes, which is controlled by the Blackstone Group, needed such low-cost financing, especially on the eve of an initial public offering through which Invitation Homes raised $1.7 billion in net proceeds.”
But Freddie isn’t going to go about it the same way as Fannie, boasting that it’s targeting a different part the single-family home-rental market.
“Freddie Mac wants to provide tens of millions of dollars in financing to midsize landlords, not to giants like Invitation Homes, which operates nearly 50,000 rental homes in 13 markets,” Goldstein wrote.
Even though Freddie Mac claims affordability is its top priority in this, CAR isn’t buying into it.
In light of the upcoming official announcement from Freddie Mac on the decision, CAR President Geoff McIntosh, “While CAR is waiting on details, we are concerned with Freddie Mac moving forward to partner with institutional investors to use what is essentially a government guarantee to compete with homebuyers.”
“While Freddie has hinted a potential deal may include affordable housing, the deal announced earlier this year by Fannie Mae did not, and there are no requirements that any future deals by the GSEs must promote affordable housing,” said McIntosh.
“CAR has worked at every level of government to support affordable housing programs; this includes maintaining existing programs, increasing inventory and finding new sources of funding for affordable housing. Freddie Mac and Fannie Mae already support affordable rentals through their multifamily programs,” said McIntosh. “This move forces homebuyers to directly compete with government-backed institutional investors who are buying a large portion of homes directly off the MLS.”
Goldstein noted in his article that Freddie Mac hopes to announce the first deal within 90 days.