Privatization of GSEs could disturb steady multifamily lending – report

by Candyd Mendoza15 Apr 2019

Multifamily financing might experience problems when Congress removes Fannie Mae and Freddie Mac from conservatorship, according to a recent report on multifamily lending trends.

According to the report, the removal of Fannie Mae and Freddie Mac from conservatorship might affect the multifamily segment, as the GSEs made up 34% of multifamily financing nationwide.

Specifically, Fannie Mae constitutes 19% of multifamily financing by dollar amount, and Freddie Mac accounts for 15% of multifamily financing.

The stability of multifamily financing is depends largely on loans of more than $100 million, according to the report. The number of large multifamily loans originated in the US rose 14% in January to September last year.

This increase kept the multifamily financing steady even as the number of smaller loans dropped. The office and retail segments also saw a year-over-year hike in the number of large loans.

“Despite the relative stability of the multifamily segment, it could run into trouble in the long term, given the reversal of a decade-long trend of declining homeownership,” CredFi wrote. “In 2017 homeownership began shifting upward, including for Americans under 35, according to the Census Bureau, and this could portend a decreasing need for apartment rental.”