How JPMorgan Chase Encourages Landlords to Keep Apartments Affordable

JPMorgan Chase (JPM) is addressing the country’s ongoing affordable housing crisis. The firm’s $30 billion Racial Equity Commitment includes $14 billion dedicated to Commercial Term Lending’s Affordable Housing Preservation program, which offers multifamily owners and operators economic incentives to keep rents affordable. To date, this program has preserved more than 100,000 affordable apartment units. Partner Insights spoke about the program with Kurt Stuart, managing director, commercial term lending Northeast area manager for JPMorgan Chase.

Commercial Observer: Tell me about the Affordable Housing Preservation program. Why did JPMorgan Chase establish it?

Kurt Stuart: Our Affordable Housing Preservation program is part of our larger firm-wide Racial Equity Commitment. We’re leveraging areas where the firm has expertise to drive a more inclusive economy. One area recognized as a barrier to racial equity is affordable housing. Nearly half of the renters in the U.S. are moderately cost-burdened, and a quarter are severely cost-burdened. The number of cost-burdened households in the U.S. today exceeds 20 million, and that number’s up more than 40 percent over the last 20 years, according to America’s Rental Housing 2022 report from the Joint Center for Housing Studies of Harvard University. This affordability gap continues to worsen every year and requires a much broader solution among private market participants and governments, both local and national. As a leader in the multifamily finance space, we felt we could leverage our unique perspective and bring innovative thinking to help address this age-old issue. 

How much money is JPMorgan Chase putting into the program?

We committed $14 billion toward financing the preservation of over 100,000 affordable units by 2025. The results so far have been exceedingly good. We recently released our ESG report for 2021 where we shared that, together with our dedicated clients, we have already committed to financing over $13 billion, which will preserve more than 100,000 units.

Let’s go a little deeper on this. Talk about how this program helps keep people in their homes.

The rental housing report also shows there are roughly 13.3 million renters who qualify for public rental subsidies in the U.S. who are unable to receive the subsidies due to lack of availability. So, they’re forced to find an affordable housing solution on the private market. Our program rewards owners and operators who maintain affordability within those properties by providing pricing incentives directly within their debt financing.

What does this do for JPMorgan Chase’s clients?

Our clients are directly invested in the communities where they operate. Many approach their tenants as customers, working hard to provide safe, clean and affordable housing options. The program allows us to stand shoulder to shoulder with our clients and help them provide those resources in their communities.

How do tenants benefit?

The cost of housing is, for many, their single largest ongoing expense. And thus, the single greatest factor in their ability to accumulate wealth. As a cost-burdened or severely cost-burdened renter, there may not be much money to grow savings, invest in education, or any other wealth-building activities. In many markets the cost of rent has outpaced wage inflation, so the existing wealth gap described earlier continues to grow over time.  Our program is designed to help preserve affordable rents thereby lessening this gap. 

It also offers enough flexibility so as not to create a disincentive for the operator to reinvest in the asset. A program that creates disincentives for reinvestment has the potential to create unsafe and unhealthy housing situations for tenants.

How does this program work in tandem with JPMorgan Chase’s other affordable housing efforts?

Our Community Development Banking team is also at the forefront of this effort. They provide capital for the creation of new affordable rental housing across the country. Additionally, we’re investing in Low-Income Housing Tax Credits and housing preservation funds. Outside of rental housing, we’re also committed to increasing home ownership. Our home lending teams have committed to originating over 40,000 home purchase loans and refinancing an additional 20,000 loans directly for Black, Hispanic and Latino households.

Has the response been consistent across markets, or does it vary by region?

Housing affordability is a nationwide issue. Statistically, there’s not a single state or major city in the U.S. with an adequate supply of housing. We’ve seen clients respond to this program in a positive way in all our markets.

What do you envision for the program’s future, and how do you see this effort progressing in the years to come?

Ultimately, housing affordability is an issue that needs national attention and coordination between governments and private market participants for better outcomes and a greater supply of housing. This is a structural problem in the U.S. It takes time to see meaningful outcomes, and we’re trying to be part of the long-term solution. At JPMorgan Chase, we’re always trying to innovate and do more for our clients and the communities where we operate. We’re only two years into our Affordable Preservation Program. While we’ll have to see what the future holds, we’ve been pleasantly surprised with the results thus far.

View more articles on affordable housing here.