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July 15, 2016

Mid-Year Update

John Cannon
Article By
John Cannon, SVP Production & Sales*

2016 is proving to be another great year. Although the days are getting warmer and the kids are out of school, we’re not laying low this summer. Instead, we want our customers and the industry to know we are here and ready to tackle even your most complicated deals.

Now that we’re halfway through the year, I want to update you on what’s been happening and what we see coming up with Freddie Mac Multifamily.

Volume—How We’re Doing

As you know, FHFA increased the lending cap from $31 billion to $35 billion earlier this year. We’ve just published our volume numbers as $26.9 billion for the first half of the year. If we continue on this trajectory, we expect to end the year slightly higher than 2015.

Locking Rates and Holding Spreads

At any time, but particularly during this period of market volatility, our capacity to lock Treasury rates and hold spreads for 60 days after going under application has been a huge differentiator for us. It has proven to be an enormous benefit for our borrowers, ensuring them that even if there is a change in market conditions, our quoted spread is “held,” providing certainty of execution that is unparalleled in the industry.

Customer Satisfaction—We’ve Heard You

We care what you think; that’s why we commissioned an outside research firm to conduct an annual customer satisfaction survey. And this year we got the highest response ever to the survey, so thank you for your time in filling it out. I’m reading all 80 pages of your verbatim comments and taking this feedback to heart.

We’re pleased at how highly you rated us as an innovative industry leader and couldn’t agree more that our “secret sauce” is our people. But we also heard that we need to continue to focus on improving our processes every step of the way. This has been a key theme for us this year and we’ve made some definite progress that I’d like to share.

Process Innovations—Moving the Needle

So far we’ve modified nearly ten processes to make it easier for you to do business with us. Things like changing the borrower’s form requirements into a more simplified process; reducing loan processing requirements and timeframes by eliminating redundancies; enhancing the transparency and communications of the assumption process; transitioning supplemental loan underwriting into a more standard process; and removing a significant bottleneck to rate locking and increasing capacity to shorten quote turnaround times.

We’ll provide a more in-depth report on process innovations in the near future, but keep in mind that this is an ongoing effort and more improvements are still to come.

Small Balance Loan Lab—A Big Success

Our Small Balance Loan (SBL) business continues to amaze. For two days in June, we brought together SBL producers and underwriters from across the country under one roof, then invited all 11 Sellers to bring in active high priority loan requests. We met with each Seller, individually, reviewed and underwrote their loan requests, finalized pricing and loan structure, and ultimately produced commitments — all of this in less than an hour per loan!

This one-of-a-kind event allowed us to showcase our expertise and dedication to creative deal solutions. This is an excellent example of how innovative out-of-the-box thinking can deliver stronger relationships and tangible business results.

The results: We reviewed/underwrote/committed 24 loans for a total of $57 million, with more than 1,200 units attributable to low income housing. We also rate-locked an additional five loans in the process.

A Better Revolving Credit Facility

Our revolving credit facility (RCF) has always been a popular product with borrowers and Sellers. Yet, as with anything we know, there’s always room for improvement. After listening to our customers, we recently made some enhancements. We simplified and streamlined its fee structure and updated the legal documentation to be more consistent with our capital market execution. Now it provides the ability to have both a fixed- and floating-rate tranche within the same facility; expands to additional asset classes; and provides a 6-month valuation vs. a 12-month valuation for taking advantage of increasing NOIs at first mortgage pricing. Even if you’ve considered a revolving credit facility before, you’ll want to take another look.

Read a revolving credit facility case study.

More Talent to Improve our Service to You

For those of you who haven’t met him yet, Tom Podgorski joined us as Senior Regional Director, Production & Sales for the Northeast region earlier this year. Tom brings over 30 years of real estate finance experience and we couldn’t be happier to have him onboard. This addition is part of our ongoing efforts to ensure we have top-notch senior-level talent—to manage our growing demands, be responsive to our Sellers' needs and stay focused on your business.

In Closing

I enjoyed meeting with many of you at the Regional Seller Workshops earlier this year. We had record turnout and expect the same at our Customer Conference October 17-19 in Miami. I’m looking forward to seeing you there and talking more about our incredible industry! As you can see, we’re excited about the business, our successes so far this year, and those to come. This is a great time to be in multifamily, and we appreciate your partnership with Freddie Mac.

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