The guarantee was revealed in an updated filing last week when Blackstone prepared to sell its 25 percent stake in Invitation Homes in an initial public offering that drew $1.8 billion, the company reported. Invitation said it has secured a loan of up to $1 billion from Wells Fargo that will be sold to Fannie. (See also: America's Biggest Landlord Files for IPO.)
INVH began trading on the New York Stock Exchange Feb. 3. The stock has since climbed about 4 percent.
Fannie Mae, along with government-sponsored mortgage backer counterpart Freddie Mac (FMCC), was long ago expected to phase out of its crucial role in the home-buying process for many homebuyers in the wake of the housing market collapse. Instead, Fannie has made a hard pivot toward supporting the growing rental market, according to a recent New York Times article.
Fannie’s stance is that the transaction “is a great opportunity to serve the growing single-family rental market” in a move that would provide Fannie with more in-depth data in the market. Because Fannie is under government conservatorship, taxpayers are responsible for the bill in the case of default.
"We predict the increase in these type of government-guaranteed securities will grow exponentially in the coming four years, and the impact on the rental property market will be extraordinary," said TIS Group analyst Andrew Roalstad in a note, according to CNBC. "We suspect these are the types of changes that the market is pricing in with its 'Trump Rally.' Shifting corporate risk to taxpayers has been a profitable business over the past few decades and throughout history. We expect we will see more of this shift in the coming years."
Invitation Homes, which previously relied primarily on private securitizations, said it plans to use the IPO proceeds to repay existing credit facilities and mortgage loans. The real estate investment trust has roughly 50,000 single-family rental homes in its portfolio.