Mitchell Kiffe: We see occupancies softening nationally over the next 12 months as the economy softens. Job losses are increasing, and this will have a material negative effect on household formation and demand for rental housing.
MFE: What are the plans for Freddie over the next year in relation to the multifamily industry? Will spreads continue to increase?
MK: Freddie Mac Multifamily plans to continue its support of the multifamily industry and to fulfill its mission of providing stability, liquidity, and affordability to the market. Our volumes will be dependent upon loan demand, which we predict will decline in 2009 from 2008 levels. Credit spreads will be driven by events in the capital markets. We currently are comfortable with the spreads we are receiving on our mortgages.
MFE: Are there plans to try to invigorate the CMBS market for multifamily loans in the next year?
MK: We currently have no major initiatives to 'invigorate' the CMBS market. We are planning to roll out our capital markets execution, which will be a securitized execution. Long-term, we plan to securitize more multifamily loans than we have in the past.
MFE: How do you think the proposed $700 billion bailout will affect the multifamily rental industry?
MK: Passage of the $700 billion reserve bill probably will have a long-term positive effect on access to credit for the apartment industry, but short-term effects are difficult to predict.
MFE: What kind of multifamily properties will Freddie be interested in financing?
MK: Freddie Mac remains interested in financing a wide array of multifamily properties in all markets across the country. We focus on quality properties and owners that are seeking reasonable leverage and terms. We are active in market rate/conventional segments as well as the targeted affordable segments. We remain committed to seniors, student, and other segments of the housing market.
MFE: How do you feel about the long-term future of the multifamily market?
MK: We at Freddie Mac Multifamily think that the long-term prospects for the multifamily market are very good. Supply and demand factors are in balance; the country is growing; the basic demographics are solid; and the overall rate of homeownership has declined from record levels. We like the long-term future of the apartment industry.