The California Association of Realtors (C.A.R.) has indicated its objections to Freddie Mac’s plans to work with institutional investors looking to invest in the single-family rental market.
The Los Angeles-based C.A.R.’s stand comes in response to Freddie Mac CEO Don Layton’s comments that the government-sponsored enterprise is exploring this possibility, according to the California Realtors’ trade association. The Federal Housing Finance Agency, which is overseeing the GSE along with its associate Fannie Mae, has authorized these entities to explore single-family rentals on a “very limited basis,” Christopher Spina, a Freddie Mac spokesman, told CIO.
According to a report from The New York Times, Freddie Mac could provide up to $1 billion in financing to smaller investors who are looking to buy single-family homes that provide affordable rentals. Fannie Mae has already participated in guaranteeing a $1 billion Wells Fargo loan to finance single-family rentals for Invitation Homes, a firm backed by private-equity investor Blackstone Group, earlier this year.
“While C.A.R. is waiting on details, we are concerned with Freddie Mac moving forward to partner with institutional investors to use what is essentially a government guarantee to compete with homebuyers,” according to Geoff McIntosh, C.A.R. president. “While Freddie has hinted a potential deal may include affordable housing, the deal announced earlier this year by Fannie Mae did not, and there are no requirements that any future deals by the GSEs must promote affordable housing.”
Freddie Mac’s Spina clarified that the transactions the GSE is looking into are “entirely consistent with our mission of bringing liquidity, stability, and affordability to the rental market.”
The C.A.R. also believes that Fannie Mae and Freddie Mac already support affordable rentals with their multifamily-oriented programs. Their backing of the single-family rental market “forces homebuyers to directly compete with government-backed institutional investors who are buying a large portion of homes directly off the MLS,” according to the C.A.R.
However, according to Freddie Mac’s Spina, “These transactions will help us better understand the challenges and opportunities in this growing segment of the rental market. Freddie Mac is exploring single-family rental transactions to help address the shortage of affordable housing for low-income and working families. Our goal is to increase the availability of rental housing in communities across the country.”