J.P. Morgan Wins Freddie Mac License To Underwrite Affordable Housing Debt
J.P. Morgan Commercial Banking secured its license to underwrite affordable housing debt for Freddie Mac, expanding the bank’s role in the government-sponsored lending market.
The Freddie Mac Multifamily Targeted Affordable Housing Optigo designation adds to J.P. Morgan’s existing agency offerings and complements a similar designation it already has with Fannie Mae.
J.P. Morgan has more than doubled the size of its agency business since 2022, growing the segment through conventional Freddie Mac loans and underwriting multifamily debt as a member of Fannie Mae’s Delegated Underwriting and Servicing, or DUS, program.
“JPMorgan Chase is the largest multifamily lender in the country, and so the addition of the affordable piece of the Freddie license was just a natural extension of the product offering that we have,” John Hofmann, head of agency and institutional capital at J.P. Morgan, told Bisnow.
J.P. Morgan contributed $6B in debt and equity to affordable housing investment, preserving more than 40,000 rental units in 2024, Hofmann said.
Freddie Mac’s Optigo designation is broadly similar to Fannie Mae DUS status. It allows a bank to provide loans to multifamily borrowers with the guarantee that the government-backed agency will then purchase the debt from the lender for securitization.
Fannie Mae's program requires that the lender hold onto some portion of the credit risk, while Freddie Mac's Optigo platform typically buys whole loans that are then securitized. The new source of funding will be folded into J.P. Morgan’s existing suite of multifamily debt solutions available to the bank’s customers.
“We're really agnostic as to the execution they choose,” Hofmann said. “We want to provide the array of debt options — from the construction loan to the permanent loan — and then we want them to choose the debt that complements their business plan the most.”
The federal government has overseen the agency lenders since the Great Recession through conservatorship. President Donald Trump has committed to cutting the agencies loose from federal control, although he has said the government would continue to guarantee the securities they bundle and sell, a key hurdle to any privatization push.
The administration is reportedly considering an initial public offering for the two agencies that could raise around $30B and value the firms at roughly $500B, but some Democratic Senators question whether the plan will push up mortgage rates.
Bill Pulte, a vocal Trump ally and the head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has shaken up senior leadership at both agencies, including by appointing himself chairman of the board at both entities.
The agency lenders underpin the U.S. mortgage markets, increasing liquidity by taking loans off lenders’ balance sheets, freeing up capital to underwrite more loans.
Freddie Mac acquired $12B in multifamily debt in the second quarter and financed 99,000 rental units, 74% of which were some form of affordable housing. Fannie Mae’s multifamily loan volume was $17.4B over the same period.
CORRECTION, SEPT. 17, 10:15 E.T.: A previous version of this article misspelled John Hofmann's name.
