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January 10, 2017

Our Commitment to Underserved Markets

David Leopold
Article By
David Leopold, VP Targeted Affordable Sales & Investments*

For years, Freddie Mac Multifamily has focused its investments on underserved housing markets. Our mission to provide liquidity, stability and affordability extends to all corners of the rental housing market—especially to those segments that need it most. The final rule on Duty to Serve from the Federal Housing Finance Agency (FHFA) underscores our efforts to help American families by strengthening affordable housing preservation, and both manufactured and rural housing.

Providing financing for affordable housing has long been an integral part of our mission. In fact, about 90 percent of the 1.25 million apartment homes we financed (2015 through November 2016) were affordable to people whose incomes were at or below the area median income.

In Targeted Affordable Housing (TAH), we continue to hit record loan volumes to house low-income families. We’re expanding our products to better serve the market—pushing ahead of the curve. We now fund more than twice as many TAH mortgages as we did in 2014. And our evolving tax-exempt loan (TEL) product line has more than tripled in volume since 2015. We helped create more than 25,000 homes for very low-income (VLI) residents in 2016 through November—doubling our volume since November 2014.

Another way we lead the market is through new efforts like Freddie Mac Multifamily Green AdvantageSM—green financing for America’s workforce housing needs. Helping owners improve the water and energy efficiency of their buildings saves on utilities, making rental housing better and more affordable. In just several short months since we launched the program, Green Advantage has really taken off and is making a difference for borrowers, renters and the environment. We’re excited that it’s helping to preserve affordability for the long-term.

Every Corner of the Market

By expanding our lines of business in recent years and making thoughtful investments, we’ve provided essential tools to the market so that people have homes they can afford. In October 2014, we officially launched our Small Balance Loans (SBL) program for smaller properties that are typically more affordable to renters. In 2016, SBL lending financed more than 15,000 workforce housing units, and more than 18,000 VLI units. Also in 2014, we created our Manufactured Housing Community (MHC) loan offering, which to date has provided $2.1 billion for more than 53,000 rental units across 31 states.

Nearly 20 percent of our MHC loans are in underserved rural, non-metropolitan areas. Many MHCs now offer more amenities and are an important source of housing in areas where affordable units are scarce.

Overall in rural housing, in 2016 (through October) we funded 145 loans supporting more than 20,000 units—an increase of 12 and 13 percent respectively—over the 2015 calendar year.

Purchasing loan pools from small banks and community-based lenders is also part of Duty to Serve. In 2015, we introduced our SBL seasoned pool initiative to provide liquidity to small banks that lend for smaller properties—keeping the cost of capital lower and the units more affordable. 

In the years ahead, we look forward to continued growth and innovation—and our partnership with all of you—to meet the needs of underserved markets. Expect to see us deliver new ways to meet housing challenges and expand our reach. We’ll be working not only to meet our regulatory requirements under Duty to Serve, but more importantly to fulfill our mission in all aspects of the multifamily market.

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