Freddie Showed It Can Play Lobbying Game Effectively
Bergquist, Erick, American Banker
Freddie Mac displayed a new prowess on Capitol Hill when it quietly won a skirmish with the Department of Housing and Urban Development late last year.
It lobbied members of Congress to alter the final rule for counting its loan purchases toward affordable housing goals, arguing that its multifamily portfolio is smaller than Fannie Mae's and should be considered proportionately.
The goals, which are set and overseen by HUD, are intended to spur both Freddie and Fannie to serve the needs of low-income homebuyers; they require that 50% of the mortgages purchased this year by the government-sponsored enterprises must be loans to low- and moderate-income borrowers.
Under the change, on loans Freddie buys for multifamily properties in very low-, low-, and moderate-income areas, it is allowed to multiply each unit over 50 by 1.35. For example, if Freddie buys a loan for an apartment building with 55 affordable housing units, it earns credit for 75 low-income loans.
"This is a good example of where substance prevailed over rhetoric," said Mitchell Delk, Freddie's senior vice president of government relations. "The arguments that HUD put forth were rhetorical, nonsubstantive, and not supported by the facts."
It can be seen as the second such victory for Freddie and Mr. Delk in recent months, some observers say. In October, he struck a valuable truce with congressional critic Rep. Richard H. Baker, R-La., who had been questioning the GSEs' financial safety and soundness.
Under terms of that agreement, Freddie and Fannie will make additional financial disclosures and will issue subordinated debt. A Fannie Mae lobbyist said that the deal was a coordinated effort, but several sources contended that Freddie chairman Leland Brendsel and Mr. Delk orchestrated it on their own.
In the latest conflict, Mr. Delk began making the rounds on Capitol Hill late last year, asking lawmakers to expand an incentive that HUD granted Oct. 31 in its final rule establishing the housing goals. …