Overview
- Freddie Mac Multifamily Asset Management and Operations has been funding and servicing multifamily mortgages since 1993, and as of Dec. 31, 2023, it cumulatively financed over $954 billion for nearly 13.2 million multifamily units.
- We affirmed our overall ABOVE AVERAGE ranking on Freddie Mac Multifamily Asset Management and Operations as a commercial mortgage loan master servicer.
- The ranking outlook is stable.
DALLAS (S&P Global Ratings) June 27, 2024--S&P Global Ratings today affirmed its ABOVE AVERAGE ranking on Freddie Mac Multifamily Asset Management and Operations (Freddie Mac AMO) as a commercial mortgage loan master servicer. The ranking outlook is stable.
Our ranking reflects Freddie Mac AMO's:
- Experienced and tenured senior management team, despite a recent change in leadership;
- Effective and comprehensive employee training and development program;
- Continued low levels of multifamily mortgage loan delinquency rates;
- Integrated and effective technology systems;
- Comprehensive subservicer (seller/servicer) oversight program;
- Sound audit and control environment, although it has a longer-than-average internal audit cycle than that of most servicers;
- Homogenous multifamily property portfolio, with limited exposure to other commercial property types;
- Financial support and implicit guarantee from the U.S. government; and
- Continued position under the conservatorship of the Federal Housing Finance Agency (FHFA) limiting the ability to control its future.
Since our prior report (see "Servicer Evaluation: Freddie Mac," published Nov. 7, 2022), the following changes and/or developments have occurred:
- The "serviced by others" portfolio increased to $131 billion as of Dec. 31, 2023, from $97 billion as of June 30, 2022.
- The traditional K-Deal (i.e., capital market execution and securitized tax-exempt loans) portfolio balance was relatively flat at $327 billion as of Dec. 31, 2023, compared to $329 billion as of June 30, 2022.
- The FHFA issued its annual Conservatorship Scorecard, which provides for a $70 billion cap on the multifamily purchase volume for Freddie Mac in calendar year 2024 (down from $75 billion in 2023). Within this cap, certain loans in affordable and underserved market segments are considered "mission driven." The 2024 scorecard requires that a minimum of 50% of Freddie Mac's multifamily loan purchases be mission driven. Loans to preserve affordability at workforce housing are exempt from the above caps.
- The Freddie Mac CEO retired on March 15, 2024. The president of the company was appointed as interim CEO while a search for a new CEO is ongoing.
- The chief financial officer announced his resignation in early June and will be leaving the company the end of June. Plans are ongoing to identify a successor.
- An over 21-year internal employee was promoted to a newly created role as senior vice president (SVP), multifamily chief operating officer. This SVP role oversees the combined responsibilities of asset management, operations, and business management, and also includes loan administration and servicing, counterparty risk management, marketing, employee engagement, business strategy, and management reporting. He reports to the head of multifamily.
- An industry experienced candidate was hired as vice president (VP) of multifamily portfolio surveillance. This position was created from a restructuring in the asset management team.
- The company hired an experienced industry candidate to fill the multifamily loan servicing director position, which became available due to a retirement.
- A 22-year internal candidate was promoted to VP multifamily operational risk. He reports to the VP of technology and operational risk.
- Multifamily operational risk and technology functions were combined into a new role. An internal promotion filled this position also serving as the multifamily divisional risk officer (DRO).
- An internal candidate was promoted to SVP of multifamily production and sales. As a 22-year veteran of the company he will also continue with his responsibilities in small balance lending and with targeted affordable housing initiatives.
- The company continues to invest in its strategic transformation (started in 2018 as a five-year digital plan and since expanded), including increasing responsiveness, optimizing data, providing portable access, and easing the user experience.
The ranking outlook is stable. The outlook reflects our view of the company's continued ability to handle its extensive master servicing portfolio in a proactive manner. Freddie Mac AMO's experienced staff demonstrates commitment to conduct its servicing operations in a well-controlled manner while handling the portfolio's growth. The company continues to promote and hire staff as needed. The company has an extensive audit regime and well-written policies and procedures. Freddie Mac AMO maintains ongoing investments in upgrading systems while streamlining their procedures on a routine basis
The financial position is SUFFICIENT.
Related Research
- Select Servicer List, May 17, 2024
- Research Update: U.S. 'AA+/A-1+' Sovereign Ratings Affirmed; Outlook Remains Stable, March 27, 2024
- Servicer Evaluation: Freddie Mac, Nov. 7, 2022
- Servicer Category Descriptions Expanded and Revised, Feb. 28, 2022
- Analytical Approach: Global Servicer Evaluations Rankings, Jan. 7, 2019
This release does not constitute a rating action.
| Servicer Analyst: | Marilyn D Cline, Dallas + 1 (972) 367 3339; marilyn.cline@spglobal.com |
| Secondary Contact: | Adam J Dykstra, Columbia + 1 (303) 721 4368; adam.dykstra@spglobal.com |
| Analytical Manager: | Robert J Radziul, New York + 1 (212) 438 1051; robert.radziul@spglobal.com |
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