February 02, 2016
By Stephen G. Johnson
I’ve never been part of a rocket launch before … But the preparation, the anticipation, and then the high-g acceleration must feel something like the lift-off our Small Balance Loan (SBL) program had in 2015.
And the success of that lift-off can be seen in the numbers we achieved: In the first full year of our program, we more than doubled our original goal—funding over 1,000 loans with a combined value of $2.6 billion. We also surpassed expectations with our securitizations—completing 10 that totaled more $1.7 billion.
However, success is about much more than the numbers. It is also about the accomplishments that build to those numbers and the people who make them possible. In our case, teams from across the Multifamily line of business focused on the success of the SBL program—a talented and diverse group, who combined their broad skills and experiences to make each component of the program fast and flexible. As a result of their efforts, our competitive pricing, streamlined “prior approval model”, and hands-on approach set new standards in the market. And we established a program that is not just preserving, but expanding an important source of workforce housing for the nation.
Importantly, this success would not have been possible without the outstanding lenders in our nationwide network. Our lenders expanded their teams, marketed the program and partnered closely with us to develop the business. These partnerships enabled residents, borrowers, Sellers and investors to all benefit from our program’s unique and innovative execution.
When there is a clear vision with a singular objective, and solutions are driven by a talented team with a determined “never say never” attitude, rockets can be launched and a business can lift-off.… and lift-off we did!
Here are some highlights from our 2015 lift-off in the words of the Freddie Mac team members:
We created our small balance loan offering to be the best in the market. Not only did we blaze trails, we set a new standard for the way small multifamily financing is done. We simplified the pricing process, streamlined early rate-lock and full underwriting with less documentation and abbreviated third party reports. And we are not done - look for additional improvements this year.
– Michael Patterson, Vice President, Underwriting
I credit this to our strong service and commitment to our Sellers and how we both partnered on our approach to the market. The combination of strong mortgage options and the service we provide enabled the Sellers to far exceed their volume expectations, with the top five Sellers more than doubling their volume goals.
– David Cardwell, Director, Production & Sales, Small Balance Loans
We created shorter, simpler standardized loan documents and streamlined our title insurance requirements. These changes simplified the loan process tremendously and saved borrowers money. In most states, borrowers saved hundreds to thousands of dollars per loan on title insurance alone.
– Filicia Davenport, Associate General Counsel
The program really took off in the second half of last year. It was busy and stressful and the team worked at a very fast pace – averaging 7 to10 loans per day. It felt like we were building an airplane and flying it at the same time!
– Audrey Kestner, Director, Small Balance Loan Servicing
Finding investors for small loan securitization was a challenge, not because of the product – which practically sells itself – but because we were looking for a completely different investor base than what we traditionally have found in our K-Deals. Through one-on-one meetings with new investors, we have gradually expanded our reach, and with each securitization that we price we have more and more new investors involved. We expect to continue that trend throughout 2016.
– Mitchell Resnick, Vice President, Capital Markets
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