The Kushner family real estate company, partly owned by White House senior adviser Jared Kushner, was granted $850 million in government-backed loans with “unusually good terms,” New York Public Radio and ProPublica reported.
The loans backed by the government-sponsored Federal Home Loan Mortgage Corp. — known as Freddie Mac — granted last year to Kushner Companies made it possible for the business to purchase thousands of apartments in Maryland and Virginia in its largest deal in a decade, according to the joint investigation by WNYC and ProPublica.
Jared Kushner gave up running the company after father-in-law President Donald Trump gave him a job as White House adviser. But he remains a key stakeholder in the company, and has made millions of dollars from the business, including from operations linked to the Freddie Mac-backed deals, according to his financial disclosure filings.
Sixteen of the loans were first reported last year by Bloomberg, but the details of the Kushner Companies’ favorable terms were not revealed until now.
A total of 18 loans the company obtained with Freddie Mac last year allowed more borrowing and lower monthly payments than was typical for similar loans, the investigation found.
The arrangement allows the company to pay only interest for 10 years, postponing payments on the principal for a decade, according to the articles. That increases the risk to investors who buy bonds that include the Kushner mortgages, and to Freddie Mac and taxpayers in the event of a default. Only 6% of the 3,600 loans backed by the agency last year were interest-only for a decade or more, the WNYC and ProPublica investigation found.
In addition, Freddie Mac’s estimates of the Kushner properties’ profitability —the foundation of the rationale for the loans — appeared to be overly optimistic. All of the first 16 properties purchased with the aid of Freddie Mac backing delivered smaller profits in 2019 than Freddie Mac expected, despite a then-strong economy now battered by COVID-19.
Freddie Mac insisted in a statement that it does “not consider the political affiliations of borrowers or their family members,” and that the deal terms “fit squarely within our publicly available credit and underwriting standards.”
Neither Kushner nor Kushner Companies has commented.
After the government-backed loans were first revealed last year, Sen. Elizabeth Warren (D-Mass.) and Sen. Tom Carper (D-Delaware) wrote to Freddie Mac’s CEO expressing concerns about the transaction “because of Kushner Companies’ history of seeking to engage in deals that raise conflicts of interest issues” with Jared Kushner. Nothing apparently changed.
Read the full article at ProPublica here and at WNYC here.