Ex-Freddie Mac CEO warns that lack of assist might endanger the multi-family

David Brickman, the former CEO of the government-sponsored Freddie Mac, gave indulgence to homeowners on Wednesday but gave less opportunity to assist renters.

Measures such as the moratorium on vacant leases and the temporary suspension of loan payment for landlords that relieved tenants were necessary, but incomplete solutions as they did not provide useful relief for tenants, said Brickman, who is now head of a new agency credit platform supported by Barings and Meridian Capital.

Freddie's approach to relieving the housing sector has been more indirect, and that can have some value, but only if it's passed on to tenants as intended, said Brickman, who experimented with low-cost mezzanine finance to landlords prior to his appointment as CEO when they have capped rent increases.

His remarks are in line with a broader consensus that multi-families could have a relatively rockier path than the single-family sector, as tenants tend to have lower incomes and have generally suffered greater financial hardship from the pandemic but have received less direct support.

Congress approved more than $ 20 billion in rental support in each of the two most recent bills to be distributed across state and local networks. Many states have also chosen to allocate some of the discretionary resources under the CARES Act to assist tenants.

"We'll see how this works soon when we introduce tenant relief from the December COVID Relief Act or the recent American rescue plan, but I'm not sure the first signs are encouraging," he told an organized virtual event from the Urban Land Institute. "We need a better safety net for at-risk tenants, and hopefully people in and around the home finance ecosystem will think about that in the future."

Brickman didn't have an immediate answer as to what the ideal means of distributing tenant direct relief other than saying it should be distributed immediately and efficiently. When asked about a universal voucher system, he said it would depend on the execution.

"The hard part of any of these implementations is making sure you can have an effective, instant delivery system in place," he said. “One vehicle that worked well was on the single family home side and could only say to a large number of owners, 'You can ask for indulgence on your mortgage. Raise your hand … and put your mortgage payments on hold. "This is a pretty quick and effective delivery mechanism."

Brickman declined to ponder whether the GSEs should be fired from the state conservatory, but suggested that they employ credit risk transfers and expand the role they play.

"I can't say exactly what policymakers will do, but I think there are significant opportunities to leverage the GSEs," he said.

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