When on the road, Jeffery Hayward often carries a personally customized guide, with the addresses of all the multifamily buildings that Fannie Mae has financed in the area. Then the head of the government-sponsored enterprise’s Multifamily Mortgage Business drives from building to building.
“I want to see what we are financing,” Mr. Hayward told The Mortgage Observer recently, during a series of meetings in his Washington, D.C. office. “I have actually walked a lot of the properties that we financed—I know what they look like, I have seen the tenants.”
When describing Mr. Hayward colleagues often mention his affable nature and his ability to put people at ease, even through tough times. His energy and his ability to listen, several people said, were pivotal in reenergizing the division. In fact, the first year under his leadership, which began in January 2012, Fannie Mae had its third highest year for loan acquisitions for financing to the multifamily market.
After 26 years at the GSE, spent both in the single family and in the multifamily business, Mr. Hayward speaks about working at Fannie Mae in almost mythical terms—referencing its mission to bring liquidity to the market and, more broadly, to solve the nation’s housing problems.
“When you ask people here what really gets them excited, it is knowing that you are helping the country and families to have decent rental housing,” he said. “It might sound corny, but this really is how people feel.”
When Mr. Hayward took over from Kenneth Bacon, who retired after having run the multifamily division since 2005, he found a business in good shape and in rebound after the recession, he said. In 2012, for instance, Fannie Mae provided financing for almost 560,000 units of multifamily housing, for a total volume of $33.8 billion. This was up from 423,000 units and $24.4 billion in financing the year previous.
“As a single entity we probably bought or acquired more multifamily mortgages than any single lender in the United States and we did it safe and sound, meeting our debt coverage standards and meeting our LTV standards,” he said.
Approximately 98 percent of the loans, for a volume of $33.1 billion, were delivered through mortgage-backed security executions. Enhancing the securitization program was one of the main goals that Mr. Hayward had set.
“Last year we kept enhancing a program we call GeMS [Guaranteed Multifamily Structures],” he said. “We expanded the appetite of the investors and brought in more private capital.”
Launched in 2010, the GeMS program involves the creation of structured multifamily securities created from MBS collateral. These structures, which look much like CMBS, attract larger institutional investors. The issuance of GeMS increased from $6 billion in 2011 to $10 billion in 2012. On March 14, 2013, Fannie Mae priced a $904.3 million multifamily DUS REMIC under its Fannie Mae GeMS program, the third so far this year. So far in 2013, total GeMS issuances have been $3.2 billion. Kimberly Johnson, senior vice president of Multifamily Capital Markets, estimated that GeMS issuances will reach approximately $12 billion by year’s end.
Being able to create these structures “has attracted hedge funds and other valuable players, so we are getting a lot of secondary trading and a lot of better liquidity,” Ms. Johnson said. “We started the GeMS program in 2010 before Jeff’s time, but we’ve seen a real increase in issuance and he has been a very big supporter of the GeMS program.”
For 25 years, the DUS program has granted approved lenders the ability to underwrite, close and sell loans on multifamily properties to Fannie Mae, retaining a risk position in the mortgages. In 2012, Fannie Mae’s DUS lenders delivered 98 percent of the company’s multifamily loan acquisitions. “It’s terrific to be part of a program like DUS where it’s almost like you are in a band together—a band that has been playing successfully for 25 years—where you all play the same tune, you all know the notes and it’s a perfect pitch every time it comes out,” Mr. Hayward said. The program’s 25th anniversary will be celebrated at a conference with the DUS lenders in May. Mr. Hayward had his own silver anniversary with Fannie Mae last year.