4 months ago
4 months ago
Ivan Kaufman, Chairman, President & CEO of Arbor Realty Trust, Inc., sits down with Steve Johnson, Vice President of the Small Loan Business at Freddie Mac Multifamily, for a discussion on how the Freddie Mac Small Balance Loan program has expanded liquidity to underserved markets.
Steve Johnson: Ivan we’ve been working together for about three years now. We have done a tremendous amount of business together. It has been an exceedingly successful relationship. One of the things I have wondered, is what did borrowers think of agency financing before we got together to offer the Small Balance Loan product, and what do they think about it now?
Ivan Kaufman: They were clearly very skeptical. They were skeptical that we could deliver on the terms, and that the process would work. It took a little bit of encouragement. Let’s face it — in the beginning we had a few bumps. After we worked them out, I’d say after a 6 to 9 month period, borrowers understand with clarity that it is a consistent product. One that they can rely on, and one that is very efficient. They know we will deliver.
Steve Johnson: One of the things that you mentioned was the bumps along the way. One of those bumps was probably documentation. There are certainly many documents required on the conventional side — a bit less so on the Small Balance Loan side. I wonder what you have seen in terms of innovations that have come about as of result of bumps in the road, or changes we have made.
Ivan Kaufman: Clearly there was an educational process in terms of what those types of borrowers supply. Once Freddie Mac was up to speed on it, and understood that the documentation we were getting was giving them the information they needed to make the right credit decision, you implemented the the right improvements and changes.
The other bump was that volume exceeded our expectations. So we were really people constrained. Once we got our people, once we got the process down, and once we adjusted the documentation to understand the type of borrower and type of product we have, we were just off to the races. Our volume numbers, our penetration, our borrower loyalty are all well in excess of what we could have predicted?
Steve Johnson: What do you think the future looks like for us?
Ivan Kaufman: I think we are going to continue to grow. I think we are going to continue to penetrate the market. I think borrowers are going to look to us as a very stable, and reliable financing partner to help them grow their business. More importantly, we are going to continue to provide liquidity and improve workforce housing.
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