Freddie Mac (OTCQB: FMCC) released today its monthly Insight Outlook for January. This month’s Insight examines how the large investors’, backed by private equity, business model of buy-to-rent (B2R) operations stands in contrast to that of the more-familiar, professionally-managed apartment complexes. And the Outlook looks at the recent activity around the many underwater borrowers who chose to take advantage of the Home Affordable Refinance Program (HARP) whom are now choosing to “UnHARP” and refinance into a conventional mortgage loan as a result of rising home prices and declining mortgage rates.
Quote: Attributed to Sean Becketti, Chief Economist, Freddie Mac.
“Single family rental is a significant component of the rental market. Historically — and currently — it is dominated by individuals and small partnerships. The emergence of large-scale buy-to-rent investors in recent years potentially represents a new feature of this market sector. Undoubtedly, the house price collapse following 2006 provided large-scale operators with an extraordinary opportunity to launch their operations. But, while the data is mixed, there are some signs that large-scale firms intend to manage their large portfolios of single-family rentals as an on-going business.”
“The HARP program allowed millions of underwater borrowers with good payment history to refinance without paying down the balance of their current mortgage. Many borrowers who took advantage of HARP over the past five years now have built sufficient equity so they can UnHARP to a conventional refinance with little or no cash brought to closing. This is yet another indicator of the effectiveness of the HARP program. And yet there remains many thousands more who can still take advantage of the HARP program that are currently underwater on their mortgage that should be utilizing this highly successful program.”
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is the largest source of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.