Ex-Freddie Mac CEO warns relief shortcomings could bedevil multifamily

David Brickman, the former CEO of government-sponsored enterprise Freddie Mac, gave forbearance available to homeowners high marks on Wednesday, but less so the options available to support renters.

Measures like the rental eviction moratorium and the temporary loan payment suspensions for landlords who provided tenant relief were necessary but imperfect solutions since they failed to get relief to renters in an expedient way, said Brickman, who is now the head of a new agency lending platform backed by Barings and Meridian Capital.

Freddie’s approach to apartment-sector relief has tended to be indirect, and there can be some value to that, but only if it flows through to tenants as intended, said Brickman, who prior to being named CEO experimented with offering low-priced mezzanine financing to landlords if they limited rent increases.

His remarks echo a broader consensus that multifamily could have a relatively rockier road to navigate than the single-family sector given that renters tend to have lower incomes and have generally suffered greater financial hardships in the pandemic, but have received less direct assistance.

Congress approved more than $20 billion in rental assistance in each of two recent bills to be distributed through state and local networks. Many states also opted to allocate some of the discretionary funds handed down through the CARES Act to help renters.

“We’ll soon see how this works when we roll out the renter relief provided by the December COVID relief bill or the recent American Rescue Plan, but I’m not sure if the early signs are encouraging,” he said a virtual event organized by the Urban Land Institute. “We need a better safety net for at-risk renters and hopefully that’s something that in the future folks in and around the housing finance ecosystem will think about.”

Brickman didn’t immediately have an answer as to what might be the ideal means of distributing direct renter relief, except to say that it should be distributed immediately and efficiently. When asked about a universal voucher system, he said it would depend upon the execution.

“The hard part of any of these implementations is ensuring you’re able to provide an effective, immediate delivery system,” he said. “A vehicle that did work well was on the single-family side, just being able to say for a huge swath of owners, ‘You may request forbearance on your mortgage. Raise your hand...and suspend your mortgage payments.’ That’s a pretty rapid and effective delivery mechanism.”

Brickman declined to weigh in on whether the GSEs should be released from government conservatorship, but he did suggest their use of credit risk transfers and the roles they play could be expanded.

“What exactly policymakers will do, I cannot say, but I think there are significant opportunities to leverage the GSEs,” he said.