Ensuring our Doors are Open
Laying the groundwork to purposefully address inequities in the multifamily housing finance system has been a key point of focus for Freddie Mac — particularly throughout the past two years. We made this work a priority by establishing teams in the Multifamily and Single-Family businesses that are dedicated to addressing the question of how to build a more equitable housing finance system.
In Multifamily, we listened to the market and identified three priorities: advancement for diverse borrowers, renters and affordability. We are pleased to have already delivered two outstanding new initiatives addressing tenant and affordability advancement.
Last year, we announced a Credit Building program that aids multifamily operators’ efforts to improve renter credit scores by facilitating the reporting of on-time rent payments to the major credit bureaus. This year, we created a new Impact Sponsor Award, which recognizes borrowers who preserve or create affordable rental housing that includes unique initiatives to promote tenant advancement.
Moving Forward with Purpose
Turning our focus to our third pillar — borrower advancement — the first step to ensure our doors are open to a diverse array of multifamily operators is to better understand how borrowers benefit from Freddie Mac Multifamily’s loan offerings.
We started this by expanding beyond the widely used acronym “MWOB”, Minority and Women Owned Businesses, and published our inclusive criteria of a Diverse Borrower last year in our Multifamily Seller/Servicer Guide, defined as:
- A Borrower/Borrower Principal that is a Minority-Owned Business, Women-Owned Business, Disabled-Owned Business, LGBTQ+-Owned Business or Veteran-Owned Business;
- An entity with at least 50% of the ownership or Control held by a combination of individuals who are Minorities, women, have a Disability, identify as LGBTQ+ or are Veterans;
- An entity with at least 50% of its net profits or losses accruing to a combination of individuals who are Minorities, women, have a Disability, identify as LGBTQ+ or are Veterans.
The Diverse Borrower criteria we created are purposefully expansive and intended to provide fresh insights into how our offerings reach a range of different communities. And because of the complex nature of multifamily organizational structures, we established clear thresholds to help borrowers identify appropriately on a voluntary basis. Our efforts to achieve measurable impacts within the multifamily industry require that we establish a baseline; this definition will help us do so.
Partnerships Pave the Way
As with anything new, we still have a lot to learn. We hope all our partners and colleagues in the multifamily industry embrace this definition. Together we can take big steps toward a more equitable multifamily industry and embrace all the possibilities that come with it.
Making a Measurable Impact
Luba Kim-Reynolds, Director, Investor Relations & ESG Initiatives
Toward a More Equitable Multifamily Market
Corey Aber, Vice President, Mission, Policy & Strategy