Multi-Housing News - December 2008 - (Page 6)

nmhc notebook Fannie Mae and Freddie Mac: A Look Ahead By David Cardwell, National Multi Housing Council As everyone reading this magazine knows, the apartment industry has been affected by credit and liquidity problems. But multifamily mortgage finance has been shielded from the worst of the banking and mortgage meltdown. What’s behind this phenomenon? Simply put, Fannie Mae and Freddie Mac. The two firms have been critical in continuing to provide mortgage debt to apartment firms during the current economic crisis—just as they did during previous economic storms, including the 1998 Russian financial crisis and the 2001-2002 downturn. As lawmakers and regulators begin to recast the Government Sponsored Enterprises (GSEs), National Multi Housing Council (NMHC) is making sure they understand the differences between the singlefamily and the multifamily market—and why those differences require different regulatory approaches. Multifamily firms have several sources of mortgage capital other than the GSEs, including insurance companies, banks and even HUD. Still, for various reasons, Fannie and Freddie have been the most reliable source of debt to the full spectrum of apartment owners. Banks and insurance companies are major providers of mortgage capital, but they have more restrictive loan terms, are more selective in their investments and tend to lend for shorter terms. Banks are further limited by regulatory restrictions, and insurance companies continually reset their commercial real estate investment strategies. The Federal Housing Administration (FHA) has become a source of low cost-of-debt capital, but its programs are tightly controlled and it requires borrowers to have significant control or ownership over the land. It’s also resource-constrained. Fannie and Freddie, on the other hand, are in every market across the country, and they accommodate all conditions. This is their only business. Thus, they will continue to provide the widest range of options to the multifamily market. In fact, over the past year, when all of the other sources of mortgage capital left the market, the GSEs continued to meet industry needs. Some estimates suggest they now account for 85 to 90 percent of all mortgage debt issued. Even the federal takeover has not restricted the flow of mortgage capital from the firms; they funded more than $1.2 billion in multifamily mortgages in the first two weeks of (continued on page 24) the conservatorship. For more information, visit www.multi-housingnews.com/productinfo 6 December 2008 | Multi-Housing News | Producer of Multi-Housing World http://www.deluxebuildingsystems.com/mh http://www.deluxebuildingsystems.com/mh http://www.multi-housingnews.com/productinfo

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

Multi-Housing News - December 2008
Contents
From the Editor
NMHC Notebook
Executive Insight
Finance: Acquisitions/Rehabs
Market Pulse
Development & Design: Student Housing
Market Report: 2009 Best Bets
Directory: Software Providers
Tech: Leasing Tools

Multi-Housing News - December 2008