Fannie Mae and Freddie Mac’s affordable housing divisions went their separate ways last year.

Fannie’s business model was to focus on a long-term horizon, particularly on preservation deals—what’s called “year-11” deals, in the low-income housing tax credit (LIHTC) world. A property financed through LIHTCs undergoes a 10-year credit period, then needs to refinance. And a giant wave of expiring LIHTC properties are expected to look for permanent debt over the next few years.

Freddie instead focused on bond deals, with a heavy emphasis on the New Issue Bond Program (NIBP), a limited-time stimulus program from the Treasury Department. The NIBP program expires at the end of this year, making it a short-term play.

And their respective areas of focus show up in the numbers. Fannie Mae’s affordable division grew its volume 282 percent, to $2.3 billion, over the prior year, after making preservation a priority. Meanwhile, Freddie Mac’s volume stayed the same, at $1.5 billion.

Fannie particularly outshined Freddie in terms of speed, delivering preservation deals much more swiftly than Freddie could—a big consideration on an acquisition deal.

“When we were more focused on bonds, they were able to slip ahead of us— but we want to become much more relevant in preservation cash mortgages” says Kim Griffith, vice president of affordable sales and investment at McLean, Va.-based Freddie Mac. “We’ve focused on making our process work better, and delivering a commitment within two months, from start to finish.”

One way that focus on preservation will manifest itself this year is through a new partnership that Freddie Mac will soon ink with the Department of Housing and Urban Development (HUD). Freddie and HUD will partner on a Green Refinance Program, the same agreement that Fannie Mae struck with HUD last June.

The program is attractive for owners looking to improve their properties but need more proceeds than can be found in the traditional immediate funding. Fannie Mae’s program offers up to 85 percent loan-to-value, and offers a debt-service coverage ratio as low as 1.15x, and Freddie’s will likely offer the same.

In all, the company is eager to prove out its improvements on turnaround times. “We’ve made our process a lot crisper, and I’m hoping that borrowers will give us a chance to prove that we can deliver,” says Griffith. home