Freddie Mac CEO Michael DeVito acknowledged the difficulties apartment owners are having during the GSE's second quarter earnings call. Rising mortgage rates are contributing to downward pressure on apartment values nationwide, forcing up the cost of financing properties, and slowing the volume of multifamily originations, he said.
Some of these dynamics appear to have seeped into Freddie Mac's earnings, a change from previous years when multifamily was often among the strongest elements in its balance sheet.
During the period, Freddie Mac set aside $101 million for multifamily credit losses, "driven by a credit reserve build due to deterioration in forecasted multifamily market conditions and current loan performance," according to comments by CFO Christian Lown. That allowance, 50 basis points, was up from 11 basis points a year earlier.
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