Multi-Housing News - October 2008 - (Page 30)

CAPITAL CHOICE AWARDS CAPITAL CHO ITAL CHOICE AWARDS CAPITAL CHOICE L CHOICE AWARDS CAPITAL CHOICE AW OICE C HOIC C RD CAPIT T HO ITAL CE L CH AW HOIC C RD CAPIT T HO Tell us which lenders provide ITAL CE exceptional value, superior service, L CH AW ﬂexibility and creativity. HOIC C RD CAPIT T HO And we’ll tell the industry. ITAL CE L CH AW HOIC C RD VOTE for the TAL C EA CHO O WA th OICE E DS HOIC C AR TAL C EA CHOI I AR OICE E DS L CH AW TAL C EA 2008 CHO O WA OICE E DS APITA A OIC TAL C EA Voting Criteria HOIC C AR • Pricing/Value CAPIT T HO ITAL CE • Speed of Processing L CH AW • Flexibility of Terms HOIC C RD • Loan Servicing CAPIT T HO ITAL CE L CH Tell us who you think the “best of the AW best” are - we’ll compile your votes HOIC C RD CAPIT T HO and announce the winners across ITAL CE eleven different lending categories L CH AW in December on our website, HOIC C RD www.multi-housingnews.com, TAL E as well as in December MHN. CHO AW OIC RD Log onto OICE E RD TAL www.surveymonkey.com/mhncapchoice08 E CHO AW OICE RD Voting Deadline: October 20, 2008 WA CHO AL C A CHOICE AWARDS CAPITAL CHOICE AWA CHOICE AWARDS CAPITAL CHOICE AWA It’s Crunch Time! “How will Fannie Mae and Freddie Mac financing terms change after the government takeover? (1) Spreads will hold or continue to increase; (2) underwriting will hold or continue to tighten; and (3) the GSEs will continue to buy multifamily loans to support the market and their exposure to the single-family sector.” 6 Annual and Freddie Mac’s spreads have steadily increased and underwriting criteria has tightened as well. “We have seen higher DSC requirements, more stringent underwriting, and less interest-only.” Nevertheless, the GSEs’ loan products remain by far the most competitive in the market, asserts Housman, with rates in the low 6 percent range, and 80 percent LTV and 1.20 DSC on many deals. Where LTVs are concerned, however, Gorczycki says they are even lower than Housman contends. “It used to be pretty automatic obtaining an 80 percent LTV or LTC. Today, LTV ratios are no longer as high as 80 percent,” says Gorczycki, adding that top-quality loans will stop at 75 percent LTV. Housman says the conduits are not able to deliver pricing that is competitive enough to compete with the agencies, as their breakeven spreads in many cases are higher than 400 basis points. “The conduits have been effectively sidelined. And the life companies are only able to compete well on lower leverage business and often with no advantage in rate. Thus, the GSEs remain the only viable option for most stabilized businesses, and as a result, Fannie Mae and Freddie Mac’s pipelines have exploded this year. They have captured many of the opportunities that may have gone to lenders who are currently not competitive.” Nevertheless, business volume across the mortgage banking industry is down significantly when compared to previous years, says Housman. “We have seen many deals this year that did not underwrite well and ultimately died that would have qualified and worked for the sponsors in 2006 and 2007. When compared to last year, it is clearly more challenging to find deals that work well today,” he agrees. The government placed both GSEs into conservatorship last month. How will financing terms from Fannie Mae and Freddie Mac change? Three changes are likely, surmises Housman: (1) Spreads will hold or continue to increase; (2) underwriting will hold or continue to tighten; and (3) the GSEs will continue to buy multifamily loans to support the market and their exposure to the single-family sector. Says Housman, “We are advised and expect ‘business as usual’ from both Fannie and Freddie through next year.” MHN To comment on this article, e-mail kfoong@multi-housingnews.com MHN ONLINE Sign up for MHN’s Finance & Investment digital newsletter at www.multi-housingnews.com/newsletters 30 October 2008 | Multi-Housing News | Producer of Multi-Housing World http://www.multi-housingnews.com http://www.multi-housingnews.com http://www.surveymonkey.com/mhncapchoice08 http://www.multi-housingnews.com/newsletters

Table of Contents for the Digital Edition of Multi-Housing News - October 2008

Multi-Housing News - October 2008
Contents
From the Editor
MHN TV Premieres
Market Pulse
Special Report: MHN 2008 Design Awards
Development & Design: Mirabella
Market Report: Chicago, Kansas City
Property Management: Tracking Residents’ Tech Wish Lists
Finance: Freddie Mac/Fannie Mae
Tech Report: Marketing Web sites
Products: Appliances

Multi-Housing News - October 2008