In a 25-year career at Fannie Mae, Jeff Hayward has worn a lot of different hats—director of quality control, senior mortgage-backed securities negotiator, and vice president of single-family risk management, to name just a few.

He added another title and stint to his resume in January when he was tapped to replace Ken Bacon as executive vice president of Fannie Mae’s multifamily mortgage business.

Hayward, who previously led Fannie Mae’s Community Lending organization, inherits a division that is firing on all cylinders, coming off a year in which it financed more than $24.4 billion in multifamily debt, a 44 percent increase from the year before.

But he inherits his share of challenges, too, not the least of which is retaining personnel in the age of conservatorship. Apartment Finance Today recently spoke with Hayward about the year ahead, the federal REO-to-Rental program, and the state of the multifamily market.

AFT: I’d imagine that attraction and retention of your staff is a key concern: How do you keep staff motivated and focused?
Everybody recognizes that there are going to be some parties that have ultimate say over what happens with Fannie Mae. My job is to say, “You can’t control what folks are going to do and how they’re thinking about it; you just need to go do your job.” So as it relates to our future, I think there’s a key recognition among everybody here that they don’t really control it, that somebody else does. We’re trying to make sure that everybody is focused on what they do control. What we can control is running our business well.

Is it demoralizing sometimes when people say things about our employees that aren’t true, that seem to attack them personally? Of course it is. But we have adults working here. They understand it; they know the environment we’re in.

AFT: Do you think cap rates will continue to compress in the multifamily industry?
Hayward: Fundamentally, any time interest rates are this low and capital is plentiful and people can get in and trade properties, you’re going to continue to see cap-rate compression. But at some point, that stops because it’s basically an economically bound thing—there’s not an endless amount of appreciation; there’s not an endless amount of rental increases. So, I think sooner or later the forces of nature meet and things will stop.

AFT: We know that Freddie Mac is working on a mortgage product for the REO-to-Rental program: To what extent will Fannie Mae’s multifamily division be involved in the REO-to-Rental program?
Hayward: Ed Neill, who runs the single-family REO division, worked in multifamily for years, and many of the people doing this are ex-multifamily people. So we have that kind of expertise over in the REO department. As it relates to the financing of these ventures, Freddie is doing some really innovative stuff and I tip my hat off to them. And certainly if the regulator asks us to do more we will do more.

AFT: What impact do you think the REO-to-Rental program will have on the multifamily market?
Hayward: There’s a certain kind of renter who’s going to want a house to rent. It might be somebody who has been foreclosed on before and lost their house and is just used to being in a house. It might be a larger family that really needs the rooms that a house has as opposed to an apartment. So I actually don’t see where the two businesses are at cross-purposes. I mean, our core renter is a single person 25 to 34 years old, and they’re not looking to rent a house. So I think these things can peacefully coexist, and I don’t think they’re going to affect each other at all.

AFT: What can borrowers expect to see from Fannie Mae this year? Any new programs, or tweaks to existing programs, on the way?
Hayward: Where I see there being some really great innovation is in the securitization part of what we do. We have an enhanced program called GeMS (Guaranteed Multifamily Structures), structured securities that offer bigger block size, collateral diversity, and pricing close to par. We did $6 billion of it last year. And if you think about it, we have a traditional security and it’s the size of a single asset. But if you roll up those securities and divide the cash flows, you can attract different investors—there are investors who might want a short-term tranche, or intermediates or a longer tranche. So I think some of the real exciting stuff is how to make sure we continue to bring more capital to the business by dealing with the securities a little differently.