JPMorgan Chase’s Vincent Toye Talks Changes in the Agency Lending Landscape

Multifamily assets are making a strong new showing in CMBS executions.

This was one of the industry trends discussed during “Understanding Agency Lending – How Industry Experts Are Opening New Doors & Expanding Across Key Markets,” an April 8 webinar hosted by Commercial Observer Partner Insights, and presented by JPMorgan Chase.

The discussion with Vincent Toye, Managing Director, Head of Agency and Off-Balance Sheet Lending for JPMorgan Chase, was moderated by Larry Getlen, Head Content Writer for the Commercial Observer.

Toye, who joined JPMorgan Chase in January after five years at Fannie Mae, followed by 14 years at Wells Fargo, began by discussing key changes in the multifamily market over the past few years. 

“One of the big changes has been borrowers getting bigger while lenders consolidate,” said Toye. “You’ve also seen a continued focus for Fannie and Freddie on affordable housing, as well as them issuing more and more of their securities. Back when I worked at Fannie Mae, both Fannie and Freddie held most of their loans on their balance sheets. Now, they’re originating them through their franchisees, insuring them, and then selling them out to the capital markets and investors.”

Toye also noted that multifamily assets are making a strong new showing in CMBS executions.

“Two years ago you would very rarely find that, but this year you’re seeing more and more of it because of the caps the regulators put on both Fannie and Freddie,” said Toye. “More capital from the private sector is showing up to finance multi-family housing and CMBS execution.”

Discussing agencies, Toye talked a bit about some of the public’s greatest agency misconceptions.

“One of the things folks don’t understand is that things change with agencies, especially being in conservatorship,” Toye said. “A few years ago, they were large portfolio lenders, and now they aren’t. If that means having a cap where they can’t do as much business, or we’re focusing on affordable housing or other initiatives, they’re sort of controlled by that. When you look at Fannie and Freddie, they are always in the market, there to provide support during good times and bad.”

Toye segued from here into a discussion of JPMorgan Chase’s commitment to agency lending.

“Most folks don’t think of agency lending when they think of JPMorgan Chase. But people in the multifamily space realize that JPMorgan Chase has been the number one multifamily originator for quite a while on balance sheet,” Toye said. “So we’re taking that, our viewpoint of us being a big issuer, as well as the investing we do in agency securities. We’re learning from all that to help us provide a more efficient agency lender.”

Toye noted that the company is also working on new products 

“We just came out with a product where multifamily development owners can say, ‘I’m going to keep my property affordable.’ That’s something we’ve been doing to help support the need for affordable housing,” Toye said. “We work to come up with different solutions regardless of the cycle we’re in.”

This creativity in agency lending will serve to further expand JPMorgan Chase’s client base. 

“The agency piece will allow us to go more broadly nationwide, as well as serve up to the biggest institutional clients,” Toye said. “They love dealing with JPMorgan Chase and enjoy being our customers, and a full suite of solutions will allow us to serve our existing clients plus clients that operate in different markets than where we historically focused. We can service clients that are bigger in scale throughout the country.”

JPMorgan Chase’s new agency work will also assist the company’s commitments to affordable housing and racial equity.   

“The firm made a commitment of $30 billion to help tackle equality throughout the country, including $14 billion of business from the affordable housing space, and a hundred thousand units on top of that,” Toye said.

Asked about some of the greater challenges in his current role, Toye discussed how the steepening of the yield curve impacts actions he can take within the agency space.    

“Six months ago, the yield curve was pretty flat, so borrowers were really attracted to longer-term financing, which is a perfect sweet spot for Fanny and Freddie vs. the balance sheet,” Toye said. “But now with the steepening of the yield curve, folks have started going in a little shorter, whether it’s five or seven years. That hits a sweet spot for what some of the banks and insurance companies were able to hit vs. the agency. That, along with the asset cap of only being able to do $70 billion of business a year with 50 percent having to be affordable, impacts what you can and can’t do in the agency space and how competitive we are.”

At this point in time, Toye said that the most exciting aspects of his new job include having the chance to build a business from the ground up for a company like JPMorgan Chase.

“It’s a challenge because it’s all on you. You’re not stepping into a position where it’s been successful or hasn’t – the role just hasn’t been there,” Toye said. “The other thing that’s been exciting for me is to be at an institution like JPMorgan Chase, where our leader, Jamie Dimon, has stepped up to be at the forefront of addressing issues from affordable housing to equity. That’s been really exciting, to be at a place where they’re excited about what the company stands for and helping to ensure that everybody’s given equal chances throughout the country.”