After cornering 87 percent of the multifamily market in 2009, the government-sponsored enterprises Fannie Mae and Freddie Mac accounted for less than half of mortgage originations in 2013, according to New York-based research firm Real Capital Analytics (RCA).

From 2012 to 2013, the agencies’ share of the market fell from 69 to 47 percent as banks, insurers, and commercial mortgage-backed securities (CMBS) originators claimed more market share.

“This is the normal cycle,” says Mitchell W. Kiffe, senior managing director with Los Angeles-based CBRE and former head of production at Freddie Mac. “As the economy gets better and as liquidity returns, their share goes down. It’s a natural cycle.”

Individually, Freddie saw originations drop 10 percent and Fannie saw them drop 15 percent in 2013, according to RCA. CMBS lenders picked up some of the slack, gaining 8 percent market share. Domestic banks corralled 24 percent (up from 16 percent the year before) and insurers grabbed 8 percent market share (up from 5 percent the year before).

A combination of factors are driving these increases, Kiffe says. Pricing, proceeds, and underwriting terms are important, but they are not the only catalyst.

“Process is important,” he says. “Speed of execution and flexibility are important. All of those things go into the mix.”

Banks are also strong players in the value-add space because of these factors.

"Banks are very competitive on the B-class deals with value-add opportunity,” says Brian Murphy, a senior investment broker in the Dallas office of Atlanta-based Apartment Realty Advisors. “ARA Dallas closed two transactions last week where the buyer financed the deal with a bank. Both were closed in less than 30 days from execution of contract and one of the deals was 17 days."

Value-add deals aren’t the only deals where the private market is becoming more aggressive. Kiffe says the banks have been “very aggressive” in lending on stabilized communities. The agencies have historically avoided lease-up risk.

“This plays to the life companies because they have a lot of flexibility to place permanent financing on properties in lease-up,” he says. “They’re willing to take lease-up risks if it’s a good asset in a good market.”

Kiffe thinks the political uncertainty surrounding Fannie and Freddie can also play a role in their diminished market share, though it's generally at the margins.

"We have a lot of clients that are mindful of the uncertainty," he says. "Intellectually, they would like to diversify debt capital sources. On the other hand, usually they will end up taking the best deal."