We're working on a couple of other securitizations, mainly pass-throughs, where we pass through all the cash flows into a single pool, much like the single-family MBS market. We hope to get that out to the market in 2010. With that, we'll have the ability to finance our business with debt. So with the pass-through and this capital markets execution, we'll be able to manage both our credit risk and interest rate risk and fund as much volume as we choose to do.

GlobeSt.com: Speaking of volume, what did your multifamily business look like in 2009?

May: The market has contracted and our volume has contracted accordingly. We're down maybe to the tune of 25% or more, so there's not a lot of business going on. What little business there is, Freddie Mac and Fannie Mae are taking the majority of it. FHA has some and certain banks will do deals now and then.

GlobeSt.com: Do you expect volume to decline further in 2010?

May: It's been slowly contracting quarter-over-quarter in 2009, and it feels really light right now. I think the contraction will continue in the first and second quarters. After the summer, probably in the third quarter, transactions will start to flow, things will bottom and then start to pick up. But I'm pretty sure we'll close 2010 down from last year. I'd bet on that one.

GlobeSt.com: Late last year, Fannie Mae said it needed another $15 billion in emergency aid from the government. A lot of observers took that as a sign that perhaps the government will move forward with the changes that have been proposed for the GSEs. What do you think of Congress' options for the GSEs and the related discussions on the Hill?

May: I think a lot of smart people have thought through all the various issues and offered solutions to the problems. Each one of those options has its own benefits and shortcomings. Congress will get together and try to optimize the solutions for the American people.

We plan to continue to highlight the success of the model we're currently in, which is providing liquidity to the market and helping the affordability. That's pretty obvious in this business cycle as you compare multifamily to other sectors like retail or office. If you talk to people about the asset classes, they would highlight the stability of the multifamily space and they'll almost unanimously say it's because of Fannie Mae and Freddie Mac.

GlobeSt.com: Several companies have failed and delinquencies are on the rise, particularly in the multifamily space. Freddie has done an increasing amount of deals in the multifamily space. Are you concerned at all about your exposure to the market?

May: Any lender is concerned about its exposure in this market. Continued job losses put pressure on the earning potential of an apartment property. If the nation continues to lose jobs, there will be more defaults. But if you look at the short term, there's a lot of stress on the system because of the lack of job growth, but in the intermediate term--a couple of years out--the fundamentals are very strong for multifamily. There's a lack of new supply, there's continued population growth and if the job situation reverses, multifamily is a great place to be in. Longer term, most professional apartment managers understand that, and they're not about to give up on the bottom of the market. Despite a pickup in delinquencies, I think apartments will weather the storm better than anyone else.

GlobeSt.com: What kind of deals have you been doing?

May: Most of what we're seeing is refinancing. There really aren't many acquisitions occurring. It's a really odd spot in the cycle because everyone agrees that the current market is in very bad shape, but they also agree that it won't be too long before the market turns around. The people who may be inclined to sell are holding on until the market improves. The people who want to buy want to do it now because this is the best deal they'll get. There is a lot of discussion and not a lot of transactions.

And we've been active in all markets. We're primarily a conventional, market-rate apartment lender. We've seen a pickup in student housing and we have a fair book of seniors housing business. Our target affordable business was off in 2009 over 2008, but we're still doing business. There are good apartments, good properties and good managers in every market, and we're eager to make those loans. One thing about our business model is that every loan is unique and we don't have an official credit guide to follow for every deal. We underwrite every loan that comes to us from our lenders to make sure it works for our portfolio.

GlobeSt.com: Most expect conditions to continue to be poor at least for the first half of this year. What do you expect for the multifamily industry in 2010?

May: I think 2010 is the transition year. The fate of the GSEs will be determined this year. It's important for people to understand the value of the work we do. I like the story about the liquidity that we both provided in this difficult time and kept the market afloat when others around it were not performing well. We think it's important for those decision makers to understand what we do and the value we bring to the market.

Also, the people who are hanging on, expecting the multifamily market to turn around because of its strong fundamentals in the interim, will learn who's right. This will be the transition year to that better market, or it won't. If it isn't, you'll end up with more defaults.

GlobeSt.com: And what's on Freddie Mac's agenda?

May: I expect the growth industry will be managing delinquencies and defaults, which will continue to rise. For management, that can take over your attention pretty quickly. So we'll see a growth in our asset management staff, delinquencies and correspondent defaults. I think the trick for us, since you don't really make money by solely focusing on those markets, is to look at growing new business, even in the face of delinquencies since those decisions were made years ago. We hope to continue to produce a fair amount of volume to maintain our high market share. We hope to continue to do our capital markets execution to get better execution for the borrower. We also hope to enter into new products, such as manufactured housing parks. We have never done those, and that's near the top of our list of new products we're going to pursue in 2010. You'll see two to four other new products in 2010.

The point is we're going to continue to expand our footprint and new production; we're not going to allow rising delinquencies to distract us from the fact that this is actually a good market to be lending in.