A Conversation With Freddie Mac’s Debby Jenkins

Here's what the head of Multifamily had to say about the new GSE caps, LIHTC investment and diversity and inclusion.

MHN met with Debby Jenkins, executive vice president & head of Multifamily for Freddie Mac, right after Freddie Mac Multifamily was awarded the 2020 Commercial/Multifamily Diversity and Inclusion Leadership Award by the Mortgage Bankers Association. We discussed the award and Freddie Mac’s goals for 2020.

Debby Jenkins, executive vice president & head of Multifamily, Freddie Mac.  Photo courtesy of Freddie Mac

Congratulations on the D&I award! How do you feel about that?

It’s honestly something that I, personally, and the team could not be prouder of. We work very purposefully to expand the diversity in our workforce and to create an inclusive environment through our Employee Resource Groups. We work hard to ensure that we have a diverse pool of candidates when filling new positions as well. It’s a great honor to be recognized by the Mortgage Bankers Association for this work, which we hope will continue building momentum for a commercial and multifamily industry where all feel welcome.

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Tell us more about the employee resource groups and other programs.

We currently have 10 Employee Resource Groups, including our Women’s Information Network, Rising Leaders for early career professionals, InspirASIAN (Asians Supporting Inclusion and Awareness Network) and Working Parents. The ERGs were created to provide an outlet for employees to interact with their peers and their coworkers, fostering an environment where folks feel comfortable.

We also have a college hire program. We bring candidates into our headquarters for what we call “Freddie Day,” which includes a series of interviews and an opportunity to learn about Freddie Mac and the different programs and initiatives we have for new entrants into the workforce. It’s a lot of fun to watch prospective hires hear directly from members of the Freddie Mac team who were at one point sitting on the other side of the table. They’re in a great position to offer up the value proposition for working at Freddie Mac. It’s a program we’re really proud of.

How will the volume caps for the GSEs impact Freddie Mac in 2020? How will Freddie Mac allocate its share of the volume?

The bottom line is we did $17.5 billion in the fourth quarter. That was the first quarter of the five-quarter cap, which means we have roughly $82.5 billion of capital to deploy throughout 2020. We believe this year will be another year of growth in multifamily originations. That’s supported by MBA’s outlook and Freddie Mac Multifamily’s 2020 outlook, which indicate growth in the 6-8 percent range.

So, we have some certainty about our volume in 2020, and when compared with what we did in 2019, which was $78.4 billion, it feels like the right spot. If the market origination prediction levels come true, that means we’ll have a 21 percent market share, which is about in line with what we’ve really been targeting. Our goal will be to make sure that we have capital throughout the year so that we are able to provide it consistently through all cycles, regardless of where interest rates are and what market volatility may occur.

Going into the year with full knowledge of your volume target and cap is actually somewhat helpful, because we can understand how manage our pipeline on a weekly and monthly basis. We’re also heavily focused on the requirement that 37.5 percent of our volume be mission driven. We look at this as a minimum and hope to exceed it, market willing, as it is a very important part of what we do.  

Any idea of what the caps for 2021 will be?

We don’t have the numbers yet. The regulator will give us that at some point in the year. We’re not sure exactly when.

There are a lot of calls for innovation and financing in the workforce housing space. What can Freddie Mac do to help increase that supply without being able to actually be a construction lender?

Since we don’t do construction lending, what we can do is make sure that we are there for the construction lenders. They look very heavily toward a Freddie Mac takeout or permanent right at the end of the construction. In the affordable space, we provide forwards for this purpose.

Where we’re really effective is in providing permanent loans where sponsors and borrowers may refinance or acquire properties with the intention of rehabilitating or renovating in a way that preserves the units as workforce or affordable. We’re providing important debt financing for these types of efforts.

Tell me about Freddie Mac’s commitment to the LIHTC program.

We’ve gotten back into the Low-Income Housing Tax Credit (LIHTC) equity side. Over the course of the last two years, we’ve invested $500 million a year, which is the level at which the regulator has allowed us to participate. This is another way that we provide consistency and liquidity in a space that is sometimes fairly volatile. There have been periods, including a couple years ago, when lenders were pulling back from the LIHTC market. We were able to step in and help bridge that gap.

On the debt side, that’s obviously a part of our “capital A” affordable program, and we’re always looking to do more in that space given that these deeply affordable properties are a big part of our mission.

What is Freddie Mac’s outlook for the multifamily market in light of all the uncertainties out there?

We feel good coming into 2020. Market projections from a variety of sources still remain positive. Every year, there’s a prediction that rent growth will slow a little bit. I’m not sure whether that will actually occur this year or not, but the market is still very healthy. Demographic trends—the increase in renters by choice—and the general lack of supply of affordable and starter single-family homes has really kept the renter market growing strong.

We’re continuing to monitor all the macro-economic issues. We’re looking at interest rates, which are favorable right now and making it a great time to borrow money and to acquire properties, and also the overall health of the market. We feel we have ample liquidity for the year, and we think it’s going to be another very positive year in multifamily overall, especially in the workforce and affordable space.

Will there be any new programs or initiatives announced this year?

There isn’t really a “big bang,” new program. I think what we’re really doing is looking to optimize the platform in anticipation of the milestones that the regulator has set for exiting conservatorship. We’re looking at optimizing capital efficiencies and things of that nature.

But we are innovating on the risk transfer side. Our K-Deal® program will always be our flagship, but we are doing more PC issuance, and we did two reinsurance deals last year. We’re looking to expand in both of those areas and looking at other ways to continue optimizing our risk transfer portfolio. Last year was a record year for us with $75 billion in total securitizations. We expect that in 2020 our securitization volume will be right in line or even a little bit higher, assuming that we deploy into the full $82.5 billion in production.

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