Presented By: Future of Series presented by JPMorgan Chase
Agency Lending and Affordable Housing: A Talk with JPMorgan Chase’s John Hofmann
Relationships with Government-Sponsored Enterprises (GSEs) in today’s higher-rate environment are critically important, as they are counter-cyclical sources of capital and continue to lend. Partner Insights spoke to John Hofmann, who recently joined JPMorgan Chase (JPM) as Head of Agency Production, to discuss his new role and the future of Agency at the firm. Hofmann joins JPMorgan Chase with over 20 years of experience in commercial mortgage originations, having spent most of his career building capital markets businesses within a bank structure.
Commercial Observer: Why did this role at JPMorgan Chase appeal to you?
JPMorgan Chase is the largest multifamily lender in the country, and the platform has a strong reputation. I found it really appealing that we have multiple products we can coordinate to deliver customized solutions to our clients across business lines. The culture of collaboration was a big consideration for me—that’s at the core of what we do here at the firm.
I look forward to expanding the national Agency Lending team to provide solutions for multifamily borrowers, focused on Fannie Mae DUS® and Freddie Mac Optigo® lending.
What are some of your other goals in this new position?
My main goal is to put the client at the center of the experience and coordinate all our capital offerings to drive customized solutions to our clients. Our borrowers are strong operators, and they need debt that matches their business plan. With JPMorgan Chase’s holistic approach and total product suite, we can provide many options, and the borrower can choose what’s best for them.
On balance sheet, construction financing, short-term bridge loans, credit facilities, and fixed-rate products. We also offer a variety of off-balance-sheet products that include Fannie and Freddie, which are very meaningful capital providers to the multifamily market. Coordinating all of our products will deepen our existing relationships while attracting new clients to the platform—that’s my goal.
You work closely with Vince Toye, Head of Agency Lending and Community Development Banking for JPMorgan Chase. What does working with Vince mean to you?
Vince is really committed to the mission of providing affordable and workforce housing across the country. That commitment, along with his leadership, is the cornerstone of what we’re building here, and I’m excited to be part of it. Plus, his career-long expertise, in a market that is experiencing headwinds, gives me comfort that we have the right leadership to navigate this, and to help our borrowers do so as well.
Talk about how Agency Lending benefits affordable multifamily borrowers.
There’s a huge commitment from JPMorgan Chase to support affordable and workforce housing, and we use our balance sheet to provide liquidity to that space in a significant way. The ability to pair that with Fannie and Freddie and their commitment to affordable housing provides our clients with additional options. As that grows, JPMorgan Chase’s innovation and commitment will help the firm maintain its position as a leader in the industry.
Talk about how Agency Lending has evolved over time to increasingly benefit affordable multifamily owners.
The agencies are a consistent source of debt financing for landlords that support affordable housing. Now more than ever we are seeing the agencies lean in where the underlying asset supports their mission to provide liquidity and stability to the market. The Federal Housing Finance Agency recently announced the multifamily volume caps of $70MM for each enterprise with the provision that certain loans supporting workforce housing towards the cap. This is further evidence of their continued focus of providing financing or mission-driven business. The need for housing increases, Fannie and Freddie are a key part of the solution to maintaining affordable, safe, and well-maintained housing.
What are the key benefits for developers utilizing Agency Lending?
The consistency and reliability of the GSEs is a meaningful advantage to sponsors focused on the multifamily space. You know that Fannie and Freddie will be there through cycles, which brings us back to liquidity and stability in the market. They want to make sure capital flows that change over time don’t impact housing. We’re currently seeing a retreat from certain debt providers to the real estate industry primarily due to the rise in interest rates. The fact that Fannie and Freddie are there to offer borrowers debt options and keep that liquidity in the space is a huge advantage. If you’re a sponsor with a focus on providing affordable housing, you get the benefit of that consistent source of capital.
In today’s rapidly changing real estate landscape, what advice would you give someone investing in affordable housing through Agency Lending?
Real estate is a transactional business, but it’s also a relationship business. In times like these, it’s more important than ever to focus on your banking and GSE relationships. With the current industry headwinds, a good lending partner can help navigate the market. Borrowers should focus on lenders that provide a wide array of options, where it’s more of a one-stop-shop experience.
I also believe that sponsors will have to become more creative to determine how, in this rising interest rate environment, a partnership with a lender can become a relationship where crucial information is shared – a trusted advisor. And that’s exactly what JPMorgan Chase is focused on.
1 #1 Multifamily Lender in the U.S. (source: Home Mortgage Disclosure Act (HMDA) Data, United States Consumer Financial Protection Bureau)