Former Freddie Mac CEO warns aid gaps could hurt several families

David Brickman, the former CEO of government-sponsored firm Freddie Mac, on Wednesday gave high tolerance to landlords but fewer options available to support tenants.

Measures such as the moratorium on tenant evictions and temporary suspensions of loan payments for landlords who provided tenant relief were necessary but imperfect solutions because they failed to help tenants in a timely manner, a said Brickman, who is now the head of a new agency lending platform backed by Barings and Meridian Capital.

Freddie’s approach to helping the apartment sector has tended to be indirect, and that may have some value, but only if it’s passed on to tenants as intended, said Brickman, who before to be named CEO experimented with offering low-cost mezzanine financing to landlords if they limited rent increases.

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

Congress has approved more than $20 billion in rental assistance in each of two recent bills to be distributed through state and local networks. Many States have also chosen to allocate part of the discretionary funds passed through the CARES Act to help tenants.

“We’ll soon see how it works out when we roll out tenant relief under the December COVID relief bill or the recent US bailout, but I don’t know if the early signs are encouraging,” he said. he said at an organized virtual event. by the Urban Land Institute. “We need a better safety net for at-risk tenants and hopefully this is something people in and around the housing finance ecosystem will think about in the future.”

Brickman didn’t immediately have an answer as to what might be the ideal way to distribute direct assistance to tenants, other than to say it should be distributed immediately and effectively. Asked about a universal voucher system, he said it would depend on execution.

“The hardest part of any of these implementations is making sure you’re able to provide an efficient and immediate delivery system,” he said. “A well-functioning vehicle was on the single-family side, being able to just say to a lot of owners, ‘You can forbear on your mortgage. Raise your hand…and put your mortgage payments on hold. It’s a pretty quick and efficient delivery mechanism.

Brickman declined to comment on whether GSEs should be freed from government guardianship, but he suggested that their use of credit risk transfers and the roles they play could be expanded.

“I can’t say exactly what policy makers will do, but I think there are significant opportunities to leverage GSEs,” he said.