Kushner Cos. has apartment buildings from New Jersey to Maryland with more than $500 million in government-backed mortgages financed by Fannie Mae and Freddie Mac. That could put officials at those agencies in an awkward spot: If Kushner Cos. applies for a new loan, or wants to refinance, would Freddie turn them down? If Kushner Cos. fails to comply with the terms of a loan, will Fannie seek to foreclose on a property owned by the president’s in-laws?
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The FHFA is run by Mel Watt, appointed by former President Barack Obama. Watt’s term ends in 2019, at which point Trump will pick a successor, though it’s possible the president could try to remove Watt from office before then. FHFA spokesman Peter Garuccio declined to comment on potential conflicts, as did spokesmen for Fannie and Freddie.
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Before loans are issued for large or unusual deals, representatives of Fannie set interest rates and review borrowers’ applications that are submitted to the lenders. They don’t do that for smaller, routine loans.
Freddie, however, examines all applications submitted to the lender, including scrutinizing the appraisal and applicant’s history of payments on other loans. Depending on the review, Freddie representatives could adjust the interest rate quoted by the lender.
If Kushner Cos. fails to make Fannie-backed loan payments on time or violate other terms, Fannie employees would determine whether to foreclose. Fannie backs about $142.3 million of the outstanding loans.