WASHINGTON, DC–Neither Fannie Mae, nor (as we reported earlier this month) Freddie Mac will have used the 2017 multifamily lending caps of $36.5 billion that the Federal Housing Finance Agency set for the GSEs.
It is a telling development for a few reasons: one, it indicates that the uncapped businesses by the GSEs flourished for the year and two, it suggests that the reduced cap of $35 billion each that the FHFA set for 2018 should not hamper the multifamily finance market.
Not reaching their cap for 2017 also points to prudent lending on the part of Freddie Mac and Fannie Mae — even as they have stretched their programs to accommodate more collateral types and new structures.
For Fannie Mae, its growth was most evident in its green programs, Jeff Hayward, head of Fannie Mae's Multifamily business tells GlobeSt.com. “We did $3 billion of green in 2016. I would say we did seven-eight times more than that in 2017.”
The GSE had a banner 2017 in other categories as well: by the end of November of 2017 it had done more than what it had done in 2016 from a buy-in perspective, Hayward says. “The quality of the business, which is really what we focus on, was pristine in terms of the LTV and the service coverage. We also had our biggest year in affordable, in seniors and in one of our signature products, which allows the owner of an apartment building to renovate the property, sell it and replace it with another property.”
“A Great American Business Story”
But it is the green business that Hayward singles out as a “great American business story.” For years, he said, property owners dithered around over whether it was worth the money to invest in energy efficiency. Finally, it seemed the message sank in last year, he says, as property owners realized there are real savings to be had from these investments.
Another shift has been in the lending community, Hayward adds. “Now you talk to almost any originator and they understand what happens when you make these improvements. A greater awareness has really changed the behavior of everyone in the chain — the apartment owner, the lender and the borrower.”
All that said, 2018 will not see the same growth spurt that Fannie Mae had last year largely because of the reduced cap. “The overall level of the multifamily business will be about the same that it was in 2017,” Hayward says.
Duty To Serve
What will mark 2018, though, is the Duty to Serve plans that are going into effect. This will be the inaugural year for those plans, which focus on affordable housing preservation, manufactured housing and rural.
The difference between the Duty to Serve and the GSEs' usual focus on those areas are the plans themselves, which are about 200 or so pages long. “They are fairly detailed,” Hayward says.
Save
Save
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
