A packed crowd turned out to hear what executives from Fannie Mae and Freddie Mac had to say as these government-sponsored enterprises remain one of the main sources of capital available today to multifamily owners.
To date this year, Fannie has completed $9.9 billion in financing, with $1.7 billion worth of structured financing. Freddie is on target for $16 billion worth of financing for 2009. Panelist Steve Griffin, managing regional director of the western region for Freddie Mac Multifamily, reported that Freddie’s Capital Markets Execution (CME) program, introduced last year, has done very well and the agency is about to take a second issance to market.
The panelists, which also included Paul Lewis, vice president of multifamily customer management at Fannie Mae, and James P. Martinko, managing principal of Reznick Group, concurred that more challenging times are ahead for the industry. At Fannie, for example, the loan delinquency rate from 2004 to 2008 was at 11 basis points; by June of this year, the delinquency rate crept up to a whopping 51 percent. “The top priority for this year is not getting money out the door but getting business that is already out the door refinanced,” said Fannie’s Lewis. Indeed, refinancing is the name of the game for both Fannie and Freddie.
As of January 1, 2010, the GSEs will be required by their conservatorships to start decreasing their portfolios. To accomplish that, both Fannie and Freddie are focused on invigorating the CMBS markets. “To date, 75 percent [of our business] is financing through CMBS to sell loan off into the capital markets and most of the product we offer is MBS eligible," Lewis said. "We don't want to become the largest owner in the country. We want to extend refinancing for as long as possible." For Freddie, the fixed-rate, 10-year term CMBS continues to be a crowd favorite.