FHFA Ends Fannie, Freddie’s Single-Family Rental Pilots
This announcement follows by days what was the biggest deal under Freddie Mac’s pilot.
WASHINGTON, DC–The Federal Housing Finance Agency has pulled the plug on the single-family rental pilot programs underway at Fannie Mae and Freddie Mac. The GSEs will terminate their participation in this market, the regulator announced yesterday, except through their previously existing investor programs, which are Fannie Mae’s Multiple Financed Properties and Freddie Mac’s Investment Property Mortgages.
The FHFA has concluded that the private market can perform well in this space without the GSEs’ participation.
“What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises,” said FHFA Director Melvin Watt.
This announcement follows by days what was the biggest deal under Freddie Mac’s pilot: a $508.7 million loan for Front Yard Residential Corp. to acquire HavenBrook Partners’ 3,236 managed single-family properties for $485 million. In an interview with reporters, Front Yard CEO George Ellison said that Freddie Mac won the deal over an insurance company and an investment bank.
Managing Director Anthony Cinquini of Berkadia’s Los Angeles office, which placed the loan with Freddie Mac, noted in an earlier interview with GlobeSt.com that the GSEs helped to add a much-needed element to single-family rental home finance: longer-duration loans.
Freddie Mac entered the market several months ago with its inaugural financing of $11.1 million for TrueLane Homes, an owner of single-family affordable homes. The portfolio consisted of 195 homes and one duplex in nine different metropolitan areas across six states and the fixed-rate loan Freddie Mac provided, through Berkadia, was for ten years. The private sector, by contrast, has tended to offer only five-year loans. “Freddie has been comfortable going in at 10 years since the beginning,” Cinquini said.
Others, though, are happy to see the GSEs exit this market, such as the Community Home Lenders Association and the National Association of Realtors, both of which issued statements applauding the FHFA’s decision. “With inventory shortages facing housing markets across the country, the National Association of Realtors has long advocated for the Federal Housing Finance Agency to end its expansion into the single-family rental market and return its focus to promoting a liquid and efficient housing market, as Congress intended,” said NAR President Elizabeth Mendenhall.