Berkadia’s Austin office closed a $3.9 million deal for the financing of the Oceanfront Lofts in Galveston, Texas. PHOTO: Courtesy Berkadia


Industry experts expect the small-loan market to be at least as, if not more, competitive in 2014.

Richard Wolf says New York-based Greystone Servicing Corporation had a healthy amount of small-loan activity this year and he predicts banks and Fannie Mae will continue to be drive competition this year. While banks are aggressive in the major metropolitan areas, Fannie Mae loans are better for a long-term deal in the interior areas of the country, the senior managing director says.

Wolf, the former head of Fannie Mae's small loan division, believes Fannie will also continue to stay strong on refinancing deals this year, though Wolf expects to see more acquisition activity in the small-balance space this year.

“Fannie offers up to 30-year money,” he says. “And 10- to 12-year product is still competitive, not in the major metros, but the areas that aren’t as heavily banked.”

Meanwhile conduit lending will gain some momentum, but may not make waves in the small-loan market.

“Right now, Fannie Mae is the best option for something small,” he says. “We might be able to do CMBS down to $3 million, but wouldn’t go below—$3.5 million and above is sweet spot for CMBS.”

Industry officials are hopeful the government-sponsored enterprises (GSEs) will be given more small-loan direction as congressman Mel Watt (D-N.C.) takes lead of the Federal Housing Finance Agency (FHFA). More concrete guidance will dictate how competitive Fannie Mae will be in the small loan space next year, Wolf says. And while Freddie Mac has no small-loan program to date, that may change if Watt decides such a program would further the GSE's mission.

“Freddie Mac—well, they’re getting interested,” he says. “I think they’ll wait to see what the regulator says what they need to be doing. If small loans are the market they have to be in, well then I think it will give Fannie real competition.”

If the Freddie Mac's K-deals were to start being aggressive with small loans, it could drive better pricing for borrowers and drive Fannie Mae to be more competitive.

“I think small-loan borrowers have a lot of options at their disposal,” he says. “Life companies are out there and I don’t see that changing in 2014. I think they’re still in a good place. There’s low-cost financing available and a variety of options to choose from depending on what they want.”

Lindsay Machak is an Associate Editor for Multifamily Executive. Connect with her on Twitter @LMachak.