The uncertainty over the future of Fannie Mae and Freddie Mac looms large over the multifamily finance industry, said panelists this week at a session on housing finance reform at the annual Apartment Finance Today Conference.

Given that the government-sponsored enterprises (GSEs) account for more than 60 percent of the market for permanent debt, whatever happens to Fannie and Freddie happens to the multifamily industry at large.
About a year ago, the Treasury Department released its white paper on housing finance reform and expressed its interest in “winding down” the GSEs. Shortly after that paper came out, the National Multi Housing Council (NMHC) spoke with some senior officials to get some clarity. “I asked them what ‘wind down’ means, and I got no answer,” said Doug Bibby, president of the Washington, D.C.–based NMHC. “Treasury is expected to come out very shortly with a further statement on GSE reform, but we’ve been hearing that for a while. So stay tuned, but don’t stay up too late.”

Both agency lenders and traditional agency borrowers are beginning to feel the strain that the agencies are under in the age of conservatorship.

“It’s not an easy place to work right now. There’s been a brain drain, a number of important senior-level people have left, and we’re fearful about what that would mean in the face of a very up market,” said Peter Donovan, senior managing director of McLean, Va.–based CBRE Capital Markets. “There’s a real concern about the ability to get business done quickly. They may not quote as quickly as you’d like; it’s been difficult getting legal responses. It just takes more time now.”

Donovan has seen many of his larger clients think about contingency plans in earnest. “We’ve had some fairly substantial clients who are very focused on diversifying more right now who tell us they need a life company quote or two and need to do more business with life companies as an answer to the uncertainty of what’s going to happen to Fannie and Freddie,” he said.

Nobody expects anything to happen on Capitol Hill until after this year’s presidential election, and even then, there have been few indications from either Mitt Romney or President Obama that housing finance reform is a top-three priority.

“I don’t see anything that says legislation is imminent,” said Willy Walker, chairman and CEO of Bethesda, Md.–based Walker and Dunlop. “There are many of us who would like to have a playbook, who’d like to figure out where they’re going. But it’s that black box—it’s not knowing what’s on the other side of the curtain—that’s very difficult to deal with.”