Student Corner: Freddie Mac’s New Workforce Housing Pilot Program

<p>A recent Community and Economic Development blog post outlined the concept of Workforce Housing – housing affordable to households earning 60 – 120% of the Area Median Income (AMI) – including the roots of workforce housing initiatives, and how macroeconomic trends have challenged the supply of housing affordable to middle-income workers across the nation. In response to this diminishing supply of workforce housing, Freddie Mac has recently launched a new pilot program to help preserve workforce housing amidst trends of rising rents, by facilitating the use of private capital.  </p> <p>Freddie Mac will offer below-market-rate loans to borrowers who reduce (or maintain) rents of at least 50% of a multifamily residential property’s rental units to rates affordable for households earning 80% AMI or below over the full life of the loan — typically between 7 and 10 years. This targeted income level typically includes nurses, teachers, and first responders.</p> <p>In its first partnership within the program, Freddie Mac is working with Salt Lake City-based firm Bridge Multifamily Fund Manager, which is currently the owner of approximately 30,000 multifamily residential units across the country. Freddie Mac will purchase and aggregate up to $500 million in Capital Markets Execution program loans over the next year, originated by partners Wells Fargo Multifamily Capital and KeyBank Real Estate Capital. The loans will be bundled into one securitization at the end of the year-long term, and Bridge Capital will be required to purchase the subordinate bonds. With these funds, Bridge will acquire, rehabilitate and preserve workforce housing in multiple projects throughout the country. Rents [...]</p>