However the bill also establishes a financial safety net for Fannie Mae and Freddie Mac, agencies in which the market has lost much confidence over the last several weeks. Little surprise then that the commercial real estate industry is breathing a sigh of relief with its successful passage. The changes to the regulatory apparatus of Fannie and Freddie are substantive, Jean Everett, partner in Hiscock & Barclay's Financial Institutions & Lending practice, tells GlobeSt.com and will provide an important psychological boost to the market.
"It will have the effect of sending a strong message to investors--especially foreign investors--that the federal government understands its supportive role for Fannie and Freddie."
This is good news for developers that rely on the GSEs' funding--now a major source of liquidity for multifamily finance--as well as to the GSEs themselves. "This legislation is historic," Ken Bacon, EVP of Housing & Community Development for Fannie Mae, told listeners in a conference call recently. "It provides clarity and certainty to the market and reaffirms the role we play in the multifamily sector." These were among the opening remarks Bacon made earlier this week, before he announced Fannie Mae's mid-year DUS loan production figures.
The bill also provides a significant boost to affordable housing financing, Everett adds--specifically it enhances the opportunities for tax-exempt financing for affordable housing, including increasing the allocation of private activity bond cap to states. "These measures will help stabilize the market for housing revenue bonds and preserve and even increase the supply of affordable housing," she said.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
