Kevin Palmer

Freddie Mac came to the rescue in 2023, financing $49 billion of deal volume and delivering 423,000 units of low-income and affordable housing to the American public last year. This total included $883 million in Low-Income Housing Tax Credit (LIHTC) equity investments, a financing tool that since 2018 has committed over $4 billion to create or preserve 30,000 low-income housing units.  

Some 92 percent of Freddie Mac’s multifamily loans in 2023 financed units that rented to families at or below 120 percent of area median income, according to Kevin Palmer. “We were definitely focused on continuing to fulfill our mission of being that constant provider of liquidity, but we also wanted to properly understand the risks that were inherent in the business cycle we’re going through,” said Palmer. 

No doubt there were risks and challenges in 2023, as the near collapse of the regional banking system coupled with rising interest rates and a wide-scale liquidity pullback made nearly all lenders and originators appear like shells of their former selves compared to years prior. 

“I look back on it and feel very proud,” said Palmer. “We did $49 billion in value, and, while our volume was down 30 percent, the overall market was down 46 percent, so our percentage of the overall market increased quite a bit, and that shows the counter-cyclical role we play in the market.”  

The firm’s targeted affordable housing team financed $11 billion over 600 loans to support 90,000 units across numerous low-income communities, including in Central Harlem, rural Appalachia, Washington, D.C., and Puerto Rico. 

However, Freddie’s main focus seemed to be financing affordable housing renovation and preservation within its portfolio. Last year, the agency funded a record $2.6 billion in forward conversions on U.S. affordable rental housing and issued further commitments to fund $2.2 billion of future rehabilitations and conversions — impacting a total of 43,000 units. 

Moreover, the firm’s Equitable Housing Finance Plan encourages borrowers to self-preserve their affordable housing for the duration of the loan. To this end, Freddie Mac has begun purchasing mortgages through special-purpose credit programs, opening reserve funds to support borrowers and improving its oversight of loan servicing. 

“This is Freddie Mac itself saying, ‘We’ll improve our pricing, we’ll improve our underwriting, if you self-preserve the affordability on the units,’ ” said Palmer. “We did $49 billion of our own business with that. Our goal was 3,000 units and we did 3,200 units of self-preservation [last year].”