If there are unsung heroes to recognize at this point in the pandemic, worthy candidates are Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).
While other property types suffer from uncertain lender support, Fannie, Freddie and FHA “… management teams and staff understand they’re needed now more than ever and have responded with focus and dedication. They’re doing exactly what they should be doing in this environment.”
The accolade comes from Mike McRoberts, head of agency lending with PGIM Real Estate and chairman of the agency platform. His observations also carry the operational insights he gained from his time as the vice president and national head of sales and production for Freddie Mac.
The agencies’ solid performance so far isn’t without warning signs. The industry leader recently offered his views on what gives him hope and concern in the days ahead:
Why do you single-out the agencies for special recognition?
We rely on them for the liquidity required to keep the affordable housing industry stable. In ordinary times, national and regional banks participate more. The pandemic has caused many private-sector lenders to pull back. It’s now a nearly exclusive agency lending game in the affordable world. There’s been no capital disruption. Compare that predictability to other commercial property types. Freddie, Fannie and FHA deserve recognition. They are the shock absorbers we need right now.
Are you surprised by multifamily property performance?
We’re seeing just how resilient the affordable housing sector is. Most properties are well occupied, and residents are making rent payments. Still, there’s no stimulus plan. It’s needed now.
If you had told me last August we’d still be without a stimulus bill into November, I would have predicted far more stress than we’re experiencing now.
What else surprises you about affordable housing?
We’re in uncharted waters. We’re learning on the fly. Even so, I can’t say I’ve observed any earth-shattering surprises. What has happened is an acceleration of trends already in place before the pandemic, such as virtual marketing and leasing systems. We knew the technology would be adopted. It’s happened a lot quicker than anyone expected.
What gives you concern besides stimulus support?
We’re starting to see signs of slowed turnaround on the FHA side due to new property inspections guidelines and protocols around rate-locking. Given the loan volume, it’s starting to slow things down. We’re working hard to adjust and be even more efficient.
Then there’s all the talk around eviction moratoriums and rent control. We need to avoid that. It causes too many upstream problems. We need thoughtful, balanced solutions that work for everyone.
What advice do you have for other affordable housing leaders?
Over communicate and make your outreach as personal as possible. Video meetings are incredibly helpful. Be sure to constantly reinforce key messages. Your employees work hard and many are under stress from childcare and at-home schooling. Understand that. Working together, we’ll get through this.
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