When 2017 came to a close, Freddie Mac revealed that its green initiative had
done approximately $17 billion of loans for the year—exceeding the GSE’s
expectations by a significant margin. It was a telling announcement for the GSE
and executives were clearly proud of their achievement: the program had been
somewhat slow to start and ramping up took a bit of time. But ramp up it did.
However, from the big-picture perspective, $17 billion was a drop in the
bucket. For the year, Freddie Mac financed a record-setting $73.2 billion in
multifamily loan purchases and guarantee volume, making it, for the third year
in a row, the top multifamily financer in the US.
And yet, executives were clearly overjoyed by the green finance program’s
accomplishments. It was their baby and the goals of the program were admirable and came with a proven track record of success.
That is Freddie Mac in a nutshell: A GSE that lends billions of dollars into the multifamily market, providing a liquidity source that
is unparalleled with the private market, but still eager to innovate and get excited about its smaller programs.
In fact, 2017 was a year of growth for the GSE not just in volume but also in the breadth of the type of product that it launched and in
many cases, went on to securitize. For example, it introduced a new execution for unsubsidized affordable housing, also known as naturally occurring affordable housing or NOAH. It was a departure from the GSE’s usual affordable programs, in that it was a private-sector
execution that didn’t use federal subsidies or tax credits. This trend continues this year; recently Freddie Mac re-entered the Low Income
Housing Tax Credit space with plans to close more than $400 million in deals in 2018 and its maximum of $500 million next year.
Another indication of its success has been the support of the capital markets for Freddie Mac’s offerings: it securitized $68 billion
for 2017 across 80 separate deals, for a 30% increase over the previous year. To name one example, appetite has been strong for the
paper from its small balance loan program, which it launched in 2015.
The bulk of its securitization activity, though, in its flagship K-Deals, which last year clocked in at $56 billion. For all its innovation,
it is these K-Deals that give Freddie claim to the title of multifamily influencer. The capital it provides, along with its sister GSE Fannie
Mae, inarguably has played a key role in the multifamily asset class’ long-term stability and performance. Indeed, imagining a multi-family world without Freddie and Fannie is not a pretty exercise. Without them, there would be a substantial drop in liquidity as the
GSEs provide roughly 50% or more of financing for the asset class.
Freddie Mac’s multifamily team is headed by David Brickman, who was just named president of the entire GSE and will be transitioning to the broader role in January. Brickman is the internal candidate who was selected as a possible successor to CEO Donald H.
Layton, who recently announced his decision to retire in the second half of 2019. Meanwhile, Deborah Jenkins, currently SVP of multifamily underwriting and credit, will be promoted to head the multifamily business as EVP, effective January 1, 2019.
Another change for the multifamily team was its recent restructuring. The investments and advisory and research and modeling
operations were integrated into the multifamily capital markets department under SVP Robert Koontz. In this new role, he will oversee
these areas, while continuing his core responsibilities of pricing, structuring, investor relations and sales and securitization.
Koontz joins John Cannon, SVP, production and sales, and Leanne Spies, SVP of asset management and operations, who are part of
the multifamily leadership team. A number of vice presidents are also key members of Freddie Mac’s multifamily efforts. They include
Kelli Carhart, Lauren Garren, Peter Giles and Rich Martinez, all in production and sales; Michael H. Patterson, Steve Lansbury and Ian
Ouwerkerk in underwriting; Stephen Johnson, small balance loan business; David Leopold, targeted affordable sales and investments;
Victor Pa, investments & advisory; Susan Mudry, strategy, marketing and offerings; and Alex Chang, risk distribution and credit.
David Brickman Debby Jenkins
multifamily lending caps of $36.5 billion that the Federal Housing Finance Agency set for the GSEs. It was a significant
development since it not only indicated that the uncapped businesses by the GSEs flourished, but also suggested that
the reduced cap of $35 billion each that the FHFA set for 2018 shouldn’t hamper the multifamily finance market.
Not reaching their cap for 2017 also pointed to prudent lending on the part of the GSEs—even as they have
stretched their programs to accommodate more collateral types and new structures.
Certainly, prudent lending is part of Fannie Mae’s M.O. The GSE differs from its counterpart in that it uses a
Delegated Underwriting and Servicing model; in fact, this is the 30th anniversary of the GSE’s DUS program. The
program is executed primarily through its DUS lender network of 25 financial institutions and independent mortgage lenders, which typically assume one-third of the risk of the loans—one of the hallmarks of DUS, Fannie Mae
says. The GSE will finance loans of all sizes, from a $1-million single-asset loan to a $1 billion structured transaction.
Jeffery R. Hayward is EVP and head of Fannie Mae Multifamily, responsible for all business functions. In addition
to overseeing the division’s day-to-day operations, SVP and multifamily COO Michele M. Evans handles business
transformation, strategy, product development and management, securitization and the firm’s Multifamily Target
State technology initiative. As head of customer engagement, SVP Rob Levin leads Fannie’s multifamily production
activities, including the DUS platform, structured transactions, seniors and affordable housing, green financing,
small loans and borrower relationships. Rounding out the main leadership team is Manny Menendez, SVP and multifamily chief credit officer, who is responsible for establishing the strategic framework to analyze, manage and mitigate credit risk for the multifamily unit’s mortgage business. He also oversees credit and underwriting standards.