Freddie Mac Expands Single Family Rental Business

A New York Times article published on July 19th detailed a move by Freddie Mac to increase its single family home-rental business with mid-size landlords. According to the report, Freddie Mac could finance up to $1 billion in loans to smaller firms in order to operate affordable-housing rentals. However, according to David Leopold, Freddie Mac Vice President for targeted affordable sales and investments, "The size of the sponsor is less important than affordability."

By proposing to commit a pool of capital to middle-market firms, Freddie's approach differs from that of Fannie Mae, which recently agreed to guarantee a $1 billion financing deal with Invitation Homes, a subsidiary of the Blackstone Group. Both moves come in the wake of the Federal Housing Finance Agency's authorization of the GSEs to explore single family rental transactions. While the majority of rentals are still managed by small operators, financing for these groups and other nonprofit housing groups remains lacking, allowing the GSEs to fill what Laurie Goodman, director of housing-finance policy for the Urban Institute, called "a huge hole in the middle market."

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