Freddie Mac, the country’s largest apartment loan backer, is introducing a new program that will offer lower-cost financing to owners who agree to cap rent increases for the duration of their loan. This is going to function similarly to rent control, the goal being to keep units in private hands and control the rate of rent increases without enacting something that is involuntary.
The program is in action and available all over the country, and there are hopes that hundreds of properties will take advantage of it because of a slowing rental market. Operators who receive this low-cost loan must make at least 50% of units available affordable to households making the local median income or below. They must then agree to limit the rent growth on 80% of their units.
Freddie Mac has a big incentive to help middle-income renters, because its apartment-lending business helps fulfill a mandate from the FHFA to lend to underserved communities. About 2/3 of the $73 billion in multifamily loans Freddie Mac purchased in 2017 went to apartments affordable to households making less than 80% of the area median income.