Freddie Mac reported that it has it has become the nation’s multifamily lending leader for the first time, with $47.3 billion in loan purchase and bond guarantee volume in 2015. That’s up 67% from the prior year’s $28.3 billion mark.
The government-sponsored enterprise bests Fannie Mae, which also saw a sizable increase in multifamily business in 2015. Fannie Mae reported $42.3 billion in volume, a 46% increase from the $28.9 billion mark set in 2014.
Together, the two companies delivered $89.6 billion in multifamily loans and credit enhancements.
Of Freddie Mac’s total new business volume, approximately $17 billion was not subject to the Federal Housing Finance Agency loan purchase $30 billion cap and included certain loans for affordable housing, smaller multifamily properties, seniors housing, and manufactured housing communities.
“Our financing is in every corner of the multifamily market and more diverse than ever, reaching into small-balance loans, manufactured housing communities, seniors, student, and government-subsidized properties,” said David Brickman, Freddie Mac executive vice president of multifamily. “We are focused on increasing the availability of mortgage capital, especially to the affordable and workforce housing sectors where demand continues to far outstrip supply.”
Freddie Mac’s loans range from $1 million to several billion, and roughly 90% support rental units for low- and moderate-income households. Freddie Mac purchased more than $47 billion in multifamily mortgages in 2015, the majority of which were securitized, thus transferring the vast majority of the expected credit risk from taxpayers to private investors.
In a recent interview with Affordable Housing Finance, David Leopold, vice president of affordable housing production for the multifamily business, said Freddie Mac has been seeing growth in all segments of its affordable housing business. “This year (2015), we’ll close about $1 billion in preservation business,” Leopold said. “The second area is in our tax-exempt loans. After closing a handful of deals last year, this year we’re going to close more than half a billion dollars, including forwards and variable-rate tax-exempt loans.”
Fannie Mae has also seen widespread growth in its affordable housing business, reported Bob Simpson, vice president of affordable, green, and small-loan business at the company, last year.
“We rolled out a competitive bridge-loan product this year called the ARM 7-4,” Simpson said in September. “Basically, it provides borrowers with a seven-year, variable-rate loan with a 4% embedded cap. It comes with a one-year lockout, a 1% prepay premium, and a fixed-rate conversion option. We’ve seen a tremendous amount of growth with this product for preservation deals because it provides borrowers with the flexibility of a bridge loan so they can acquire a property and turn it into a tax credit deal a year or two down the road, or they can convert it to a permanent fixed-rate loan if their plans change.”
He also noted seeing more consolidation of portfolios and more consolidation among borrowers. “You see more larger portfolios that are up for sale that are being purchased by nontraditional affordable investors—especially some of the larger investment funds that have traditionally been in the conventional market,” Simpson said. “We’re seeing that growth resonate with our credit facility product.”