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Though not in headlines or on any popular internet news site, attorneys of GERSON LAW FIRM APC listened to reports in separate meetings in the last two weeks by leadership of Fannie Mae and Freddie Mac that included the following highlights:
- In the first three quarters of 2012, Fannie Mae provided more than $15 billion for acquisition of multifamily property. Freddie Mac has chalked similar numbers.
- Fannie Mae year to date delinquencies in multifamily are as low as .29 bps for DUS loans and .34 bps for small loans (which in most markets are loans for less than $3,000,000). Freddie delinquency rates in multifamily are similar.
- Fannie Mae and Freddie Mac’s multifamily loan programs contribution to the market during periods of volatility is significant. When financial markets are strong, conduits, life insurers and depository institutions provide financing for multifamily acquisitions, but when financial markets are week, Fannie Mae, Freddie Mac and Ginnie Mae aid the stability of new financing in the multifamily market. The following are the percent of all multifamily acquisition loans to the total finance industry by the two GSEs (and Ginnie Mae):
2006 37%
2007 44%
2008 85%
2009 89%
2010 80%
2011 69%
The numbers above should be re-reviewed again with a focus on 2008 being the beginning of The Great Recession.
In 2013 when Congress reconvenes, the future of the GSEs will again be debated. Is there “public value” to multifamily housing? A large percentage of GSE’s multifamily acquisition financing is for affordable housing in areas at or below area median income.
Multifamily is a different asset class than any other loan product, be it single family housing, retail, office, industrial or hotel. It is fact that for every one percent decline of homeownership – and yes, it has not only declined but will continue to decline – one million multifamily units are required to house America. The need is stacked on top of future multifamily units required in the United States based upon simple growth statistics of those annually entering the rental market.
In 2008 when the financial markets collapsed, and Fannie Mae and Freddie Mac provided funding as conduits, big banks, and life insurance companies turned down the spigot. Without the GSE’s can we assure money for multifamily growth in the next and next next economic downturn?
In 2013 big policy choices will need to be made with respect to the future of the GSEs. Critically important will be how we insure liquidity for a vital segment of the real estate market.
GERSON LAW FIRM APC represents clients on all matters real estate and business related, both transactional and litigation. GERSON LAW FIRM APC is nationally recognized for its representation of some of the nation’s largest lenders on loan closings, special servicing, and enforcement proceedings throughout the United States. GERSON LAW FIRM APC practice includes representing lenders closing loans under Fannie Mae’s DUS Lending Program and Freddie Mac’s Program Plus for multifamily investments. GERSON LAW FIRM APC represents major national banks, life insurance companies, and private funds in all matters lending related, including originations and loss mitigation strategies, for hotels, office buildings, shopping centers, multifamily and construction.