Multi-Housing News - April 2009 - (Page 10)

finance & investment Will GSEs Curtail Financing? Fannie Mae and Freddie Mac are mandated to reduce their financing portfolios beginning in 2010 By Keat Foong, Executive Editor L ooking to refinance your property in 2010 and beyond? With Fannie Mae and Freddie Mac supplying the lion’s share of permanent financing for multifamily, the consequences could be serious if money from the two entities for the sector should be substantially curtailed in the next few years under the Obama Administration. Yet a reduction in financing from Fannie and Freddie is a distinct possibility. When the government assumed control of Fannie Mae and Freddie Mac in September 2008, placing them into conservatorship run by the Federal Housing Finance Agency (FHFA), the U.S. Treasury committed to up to $100 billion in future capital infusion into each Government Sponsored Enterprise (GSE). It also increased the GSEs’ portfolio limits to $850 billion each to help in the government efforts to stabilize the mortgage markets. One of the conditions of the Treasury’s capital infusion, however, was that the GSEs begin reducing their portfolio holdings by 10 percent per year beginning in 2010 until a portfolio size of $250 billion is reached, which is estimated to be by the year 2020. (Incidentally, the loan limits were further increased by $50 billion each, to $900 billion under President Obama’s foreclosure alleviation program, the Housing Affordability and Stability Plan, announced on Feb. 18.) If Freddie Mac and Fannie Mae should start implementing the 10 percent portfolio reduction beginning next year under the agreement with the Treasury, however, the industry’s fear is that it would begin to curtail liquidity in the multifamily industry. This is especially of concern since both GSEs are said to now supply more than 90 percent of at least some forms of financing for multifamily. In 2008, Fannie Mae supplied $35.5 billion in multifamily rental housing financing, while Freddie Mac set a record of $24 billion in volume for its multifamily whole loan and bond guarantee business. And any reduction in capital availability in years ahead is likely to come up concurrently against a surge of maturing loans. According to the Mortgage Bankers Association (MBA), large amounts of multifamily loans will be matur- 10 April 2009 | Multi-Housing News | Official Publication of Multi-Housing World

Table of Contents for the Digital Edition of Multi-Housing News - April 2009

Multi-Housing News - April 2009
Contents
From the Editor
Executive Insight: Sue Ansel
Finance: Fannie Mae & Freddie Mac
Quote of the Month
Market Forecast: Texas
Profile: Affordable Developers
Operations: Green Laundry Rooms
Technology: BIM
Kitchen & Bath: Tile Installation
Perspective: Doug Bibby, NMHC

Multi-Housing News - April 2009