Preferred Equity Update Expands Multifamily Lending Options

Policy Shift For Broader Access

In late May, Freddie Mac updated its Preferred Equity Program, letting Optigo lenders retain servicing rights—previously not allowed. The original requirement to transfer servicing rights had limited participation from its lender network, prompting a policy reevaluation, as reported by MFE.

What’s Changing

Lenders can now make preferred equity investments and retain mortgage servicing, if they meet specific structural and control requirements. Conditions include lender control of joint-venture investment vehicles and transferring servicing rights only if control is exercised. This change applies exclusively to non-Small Balance Loan mortgages.

Why It Matters

Preferred equity strengthens the capital stack, giving borrowers more leverage and funding options to support multifamily housing projects. Lenders retaining servicing rights gain deal insight and control, while Freddie Mac ensures liquidity and stability in all market conditions.

Looking Ahead

This move reinforces Freddie Mac Multifamily’s commitment to capital innovation in housing finance. With traditional debt limited in some markets, the update offers borrowers and lenders greater flexibility to close deals effectively.

Bottom Line

With its recent update, Freddie Mac is strengthening the Preferred Equity Program, making preferred equity a more flexible tool for financing. As a result, borrowers gain better capital access, helping drive progress toward multifamily housing goals nationwide.