Multifamily Takes Up More GSE Focus, Bandwidth

SAN DIEGO—Fannie Mae and Freddie Mac have been in conservatorship for a decade, all the while continuing to play an important role in the financing of multifamily and single-family real estate. Leaders of each agency as well as their regulator talked about the bigger picture at MBA CREF last week and changes in the landscape ahead.

When Brian Stoffers, 2019 MBA chairman-elect and global president of debt & structured finance at CBRE asked about multifamily being a bigger part of the housing market today than it was 10 years ago, David Brickman, president of Freddie Mac, said that the landscape has changed and is continuing to change, noting that it is “taking on a bigger role.”

Stoffers explained that rental is becoming a bigger thing. “Originations are up and multifamily is likely to continue growing at a faster rate,” he explained. “It is taking up more of the focus and bandwidth than it used to and is contributing to the underlying economics of the business… it occupies a more strategic place in our planning.”

According to Hugh Frater, interim CEO at Fannie Mae, his agency views multifamily as an essential part of the portfolio, but notes that singlefamily housing is also important. “We don’t believe that the propensity to consume housing has changed. The millennial generation eventually will be exactly like their parents and will still want to consume housing. So singlefamily and multifamily are both super important to us.” But he added that the economics don’t look favorable to building starter homes.

Brickman agreed that he doesn’t think the fundamental economics of housing are catching up. “People will stay in rental housing a little longer. There is also a special/urban component to it. We are getting to the limits of a lot of the urban areas. The overarching issue is that things look very positive for housing in general in terms of the economics of it but not so much in terms of the affordability.”

Sandra Thompson, deputy director of the Federal Housing Finance Agency, agreed, noting that the affordability issue is real in both the singlefamily and multifamily business lines. “Both enterprises, Fannie and Freddie, perform very well during a crisis. The purpose of the enterprises is to be there through the cycles.”

There has also been advances in technology and digitization for singlefamily, explained Brickman. Things like automated collateral assessment, for example, really helps streamline the process. “It will take some time, but it will migrate over to multifamily and perhaps we will be able to leverage that.”

Frater agreed, pointing out that if you think about every situation today where you have a human entering data manually and another human looking at data manually and doing something with it, it isn’t very efficient. “I think that the kinds of things where people are entering data into a system today, for us, it is about turning that around as quickly as possible. The idea would be to get faster and faster and faster… Say yes to the right things faster.”

Thompson agreed with panelists, noting that it would be very helpful to see some of the data standardization move over to the multifamily side. “Data standardization would be very helpful.”