March 25, 2013
Posted in: Alerts
By: Gerson

Part of the Federal Housing Finance Agency’s new goals for Fannie Mae and Freddie Mac–a planned reduction in new multifamily lending–could have repercussions, said Centerline Capital Group’s William Hyman.

“If an investor or owner is thinking about financing, (they should) do it sooner in the year rather than later,” said Hyman, Centerline’s senior managing director.

FHFA’s 2013 Conservatorship Scorecard for Fannie Mae and Freddie Mac called for a 10 percent reduction in the government-sponsored enterprises’ multifamily lending. The GSEs set a record last year with more than $63 billion in combined multifamily lending. The scorecard calls for a maximum of $56.9 billion in combined multifamily lending this year.

Hyman said the multifamily market could see less interest for loans from the GSEs in the fourth quarter of 2013 as they work toward the new, lower goals, but he said a sizeable “runway” to do business remains. “For example, Fannie Mae’s multifamily volume of $33 billion in 2012 was their third-highest year in history. Prior to 2007, they averaged $20 billion a year, well below a target of $30 billion for 2013,” he said.

Fannie Mae and Freddie Mac’s share of the multifamily mortgage market has declined from 90 percent during the peak of the financial crisis to 45 percent today. FHFA said a reduction in the GSEs’ multifamily lending activity will allow private capital to compete more effectively.

Hyman said other goals FHFA laid out in its plan for the GSEs focus on the single-family sector and will not affect multifamily borrowing.

“The establishment of a new company to be jointly owned by the two organizations for securitizing single-family loans will reduce redundancies between the two GSEs and realize significant savings for the taxpayer (according to FHFA),” Hyman said. But he called the GSEs’ multifamily businesses “completely different in philosophy and operating model,” from their single-family businesses, so he said the creation of the new company will have no impact on multifamily owners.

[The above article is authored by Michael Tucker and first appeared on MBA Newslink on 03-22-13]