McLEAN, VA–Freddie Mac expects it will end 2016 having done around $55 billion in mortgage purchases, or originations as the rest of the industry would call it. It will also have done by year-end, give or take, some $50 billion in securitizations. So says David Brickman, executive vice president and head of the Multifamily Business, who shared his end-of-the-year estimates with GlobeSt.com this week.

These numbers are a significant uptick from last year when mortgage purchases were about $47.3 billion and securitizations about $35 billion. Ditto for 2014 when the GSE's mortgage purchases were $28 billion.

The reason for the growth is obvious: multifamily is a solid asset class and for the past several years has shown little sign of peaking. “Of all the uncertainty in the world multifamily feels like a modest risk,” Brickman says. “There is high confidence in the asset class' returns and it shows very good prospects for continued growth.”

For that reason, Brickman expects to see growth in both purchases and originations continuing in 2017 even as borrowers confront significantly higher interest rates.

“The multifamily market is expected to grow between 5% to 10% and we expect to grow with the market.”

Looking to 2017

It is difficult to say with certainty what Freddie Mac's plans are for 2017 with new incoming Administration but some educated guesses are not out of bounds. Melvin Watt, who was sworn in as director of the Federal Housing Finance Agency in 2014 to a five-year term, is likely to stay for the remainder of the term.

Therefore the FHFA's scorecard — that is, the marching orders the FHFA gives the GSEs each year — will likely continue to emphasize affordable housing, small balance lending, senior housing and green financing.

Brickman proudly notes that Freddie Mac has made great strides with its green financing program this year, with investors tapping it in particular to renovate some of the older housing stock. Next year, he says, the GSE plans to merge the green financing unit with the moderate rehab product, which generally targets about $30,000 per unit.

Disruption with Low Income Housing Tax Credits

The one product whose immediate future is a bit unclear is the target affordable business line that supports the use of low income housing tax credits, specifically the use of new credits.

“We are seeing some deals fall apart right in front of us due to the uncertainty about valuation of tax credits given the prospects for tax reform and the prospect of lower corporate tax rates,” Brickman says.

This makes sense after all — the new tax credits value will be uncertain until an actual corporate tax rate is set. The prospect of rising interest rates further muddies the waters.

“The uncertainty as to what will happen has pushed people the sidelines,” Brickman says.

Instant Insights /

Freddie Mac Expects to Close 2016 With $55B in MF Originations

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