Various Loan Options: The Best Bet to Overcome the Affordable Housing Crisis


“Every affordable deal that makes sense, let’s try to make it.” This is how Steve Johnson describes Freddie Mac’s affordable housing philosophy. The acting head of production and sales who oversees the affordable business said the GSE is expected to have its biggest year yet in the space. This is due to a combination of insatiable demand, abundant capital resources and the agency’s expert execution.

“The pandemic has proven the quality of our execution. There is an affordable supply issue, but there are also state and federal mechanisms that provide additional support for affordable housing,” Johnson told “So the affordable business hasn’t slowed down at all – and done pretty well during the pandemic.”

A diverse array of lending products that provide liquidity across the affordability spectrum, from Low-Income Housing Tax Credit (LIHTC) properties to workforce housing and everything in between, is essential for the company. The availability of capital as well as smart execution are key to pushing affordable housing deals across the finish line. “The better you are at this, the more likely clients are to want to work with you because you understand the complexity. That’s a big part of it. It’s not just a matter of price; execution absolutely matters,” says Johnson.

Freddie Mac is committed to best execution. The agency is an established leader in the affordable space, and they understand the nuances of affordable offerings. “There are challenges in getting these deals done. Cycle time and resource commitment represent a true opportunity cost. Every deal is a little different, and you have to be able to understand the difference and assess the risk differently, while also moving it through a cycle time that makes sense,” says Johnson, explaining that Freddie Mac tailors his underwriting to each. specific agreement. “The offers do not always take shape in the same way. And it’s important to have a variety of products to support the space.

Freddie Mac is also tackling supply-side challenges. Although the agency does not offer construction loans, it does offer a take-home construction product, a Term Commitment, which allows borrowers to lock in prices and a rate before construction. This works for deals with and without tax credits, and provides a cash bridge through stabilization to support the creation of affordable housing. It doesn’t stop there. Freddie Mac also offers tax credits and affordable conservation products.

“We are actively stimulating the creation of new supply while seeking opportunities to preserve and rehabilitate the aging affordable housing stock. But there’s still a lot to do, and we’ll continue to look for creative ways to use our term engagement product. Frankly, it’s exciting because we can focus on ultimately paying down debt while the banks can use their tremendous experience in building loans,” says Johnson. “For me, it’s a symbiotic solution for supply.”

While the economy still has to make sense to inspire a deal, Johnson believes the response to the affordable housing crisis has to be fluid. This requires a diverse range of loan products, certainty of execution and specialized expertise. “Above all, it takes experience, the right products and a reputation based on good execution,” he explains. “Working with our Optigo lenders, we have the tools to drive business forward and make a real impact for tenants nationwide.”


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