The long-term impact of the government’s takeover of Fannie Mae and Freddie Mac remains unclear, but some short-term advantages for multifamily borrowers have already become apparent.

The agencies had been raising their prices on both long- and short-term debt throughout the summer, but the infusion of capital from the federal government has neutralized that trend.

The rate for a standard 10-year deal Sept. 5 was around 6.3 percent, but a week later, that figure was down to around 6.1 percent. Five-year deals similarly dropped about 20 basis points, to 5.83 percent, in that span.

While the benchmark Treasury rates continue to remain low, “the cost of capital for both Fannie and Freddie has gone down since the takeover, and that savings is what you’ll see passed through to the borrowers,” said Don King, national program director of agency debt for CWCapital.

Fannie Mae and Freddie Mac continue to insist that it’s “business as usual” in the days following the federal government’s intervention. And many industry watchers agree that in the first week post-takeover, deals were still flowing freely to Freddie and Fannie.

“I’ve been kind of stunned at how the mantra they’ve been singing has been ‘business as usual,’” said Byron Steenerson, president of Alliant Capital. “But so far, it has been absolutely that.”

To illustrate that mantra, Freddie Mac told its lenders it had a $500 million transaction under review last week and approached its new regulator about whether or not it could close the deal. The regulator said that approval was not necessary and to do what the company has always done.

“My belief is that they have authority for at least $1 billion worth of deals in any one transaction,” said Peter Donovan, senior managing director of the Multi-housing Group at CBRE, on a conference call last week.

But the Treasury Department’s plan regarding the size of the agencies’ portfolios has cast a long shadow over the companies’ long-term fortunes.

The good news is that under the government’s plan, each agency will raise their portfolio cap by between $50 billion and $100 billion, to $850 billion, until the end of 2009. This short-term infusion will be deployed mainly to help stabilize the single-family market.

But beginning in 2010, the agencies will have to diminish their portfolios by 10 percent annually, eventually shrinking all the way down to $250 billion. That’s a staggering decline in capacity, forcing many in the multifamily industry to question the agencies’ long-term prospects.

Even Fannie Mae was unsure how the tiered portfolio cap would play out. “We’ve got $100 billion of room immediately, and we’re going to prudently make investments,” said Phil Weber, senior vice president of Fannie Mae’s multifamily division, on a conference call last week. “After we get to the $850 (billion), I don’t know exactly how that will work.”

To shrink their portfolios, both Fannie Mae and Freddie Mac will likely place more emphasis on their capital markets programs: Fannie’s somewhat dormant Mortgage Backed Securities (MBS) program,and Freddie’s Capital Markets Execution (CME) conduit program, currently under development. Unlike conventional agency deals, which are held as investments in the companies’ portfolios, these programs sell mortgages as securities.

Fannie Mae’s Delegated Underwriting and Servicing (DUS) MBS program had lost steam over the years mainly because a conventional Fannie Mae execution was easier and resulted in the same pricing, many DUS lenders noted. But the companies’ shrinking portfolios after 2009 will necessitate a revival in Fannie’s MBS program. Under the program, Fannie Mae guarantees a one-off mortgage-backed security.

“There’s no cap on how much guarantee business we could do, so longer term it’s in our best interest to get the DUS MBS market reinvigorated,” said Weber.

Freddie Mac’s CME program, which would work like a conventional conduit execution, may actually grow in importance now. “There’s going to be an even greater focus on their conduit program because, looking forward, they have to reduce their balance sheet, and one way to reduce a balance sheet is securitize the assets,” said John Cannon of Capmark, one of five lenders piloting the program.

Some new programs may have to be suspended. Fannie Mae has been developing a construction-to-permanent loan program with some of its DUS lenders and planned to roll the product out in the second half. But given the additional regulatory scrutiny facing the companies, “I would not expect any new mortgage products coming out of Freddie or Fannie certainly in the near term,” said Cannon.

The long-term uncertainty hovering over the agencies will be left for the next president and Congress to clear up. Speculation abounds in the industry regarding the companies’ fortunes, but the only thing that’s certain is that nothing’s certain.

“I feel reasonably good about the next week, the next month, the next six months,” said CWCapital’s King. “The farther you go out, the greater the uncertainty. I don’t think anyone has any idea what these two entities are going to look like three years from now.”