From Hyman's observations, shops that traditionally focused on conduit originations are now "reprogramming" their production personnel to direct business to the agency side. Centerline itself has grown its production sales force. "We've looked at the current situation as a market opportunity," he explains. "And [we] just added to our production sales force several people who come from Wall Street, but who have the ability to bring with them borrower relationships we will have access to, in order to sell the agency programs."

Meanwhile, Wachovia Multifamily Capital Inc., this year, received fully delegated status, under the Freddie Mac Delegated Underwriting for Targeted Affordable Housing model.However, those who are becoming approved to become DUS lenders, or who are stepping up their agency business, today aren't responding to the market dynamics. The actual process is so long, says CB Richard Ellis' Peter Donovan, that firms becoming approved now had to have applied a considerable time ago.

The multi-housing group within CBRE's capital markets business recently took on the Fannie Mae Delegated Underwriting and Servicing lender designation. Donovan, senior managing director of multi-housing capital markets in the firm's Boston office, says he; CBRE capital markets president Brian Stoffers; and Ron Halpern, managing director of the multi-housing group, had been involved with Fannie Mae loans for quite a while. "We recognize that Fannie and Freddie are major sources of capital for multifamily. To really consider ourselves to be a full-service provider of capital for multifamily, we felt it was imperative for us to offer both Fannie and Freddie," he explains, adding that the firm has also been a very active Freddie Mac producer and originator. CBRE also recently added a HUD/FHA-insured multifamily and health care mortgage-lending platform to its offerings.

[IMGCAP(3)]That the credit markets happened to turn is just a bonus, Donovan states, "Our timing happens to be fortunate," he says. "We certainly couldn't have predicted what was going to happen in the capital market. But under the circumstances, having Fannie, Freddie and FHA helps, and it's probably a good time for us to be building the businesses.Until that point, CBRE had been doing Fannie Mae business as an intermediary, working with DUS lenders on a third-party basis. "The problem with that, quite frankly, is it's difficult to compete with DUS lenders that are able to go directly to the client," says Donovan. "We were one player removed. As a result, we didn't do a lot of Fannie Mae business." The firm is now part of a select group that can originate, underwrite, close and service loans without prior approval by Fannie Mae. Donovan explains that "by being a DUS lender, we'll significantly increase the amount of production we do."

If the CBRE's Freddie Mac activity is any indication, it can expect to see its Fannie Mae work go up. The executive points out that the company's Freddie business doubled in 2007, and it is on track to do at least $1 billion of volume in the first five months of this year alone, and a repeat of the $2.2 billion in annual volume it racked up last year.According to Donovan, this trend should continue for some time. "As long as you have the kind of turmoil in the market you have--CMBS that is not competitively priced and life companies that have limited allocations to the debt market for real estate--then I don't see any reason why Fannie and Freddie shouldn't continue to get a lion's share of the business,' he says.

As to the potential problems with having the agencies hold a concentration of mortgages, Donovan isn't concerned. "I'd look at it the other way," he states. "I can understand why some folks may be concerned, but I say, 'Thank God Fannie and Freddie are there.' We are in a unique position in multifamily to have a source of capital that's able to step in and satisfy the need--and do it in a competitively priced and structured way that helps to keep the multifamily business on an even keel. I think any other product, be it office, retail or hotel, would love to have the kind of funding source we have with the agencies right now."

Indeed, Woodwell believes that the current conditions are just a function of market cycles. "At different points in time, you'll see different investor groups increase or decrease their relative holdings of commercial and multifamily mortgages," he says. "In general, Fannie and Freddie have been, and continue to be, a strong source of capital for the multifamily market."