David Durning has seen plenty of ups and downs during his 25-year tenure in the multifamily space.
But this year, not even three months into his tenure as president and CEO of Newark, N.J.-based Prudential Mortgage Capital, Durning can safely characterize 2013 as an up.
“We’re very well positioned,” he says. “We’re unique in being a life insurance company that’s involved in CMBS and agency business in scale. All of our businesses are performing well. That’s a pretty good place to be.”
Last year, the company originated $12.2 billion loans overall, with more than $4.2 billion in the multifamily space alone. Of that $4.2 billion, more than $1.9 billion were Fannie Mae or Freddie Mac loans.
Recently, Fannie and Freddie were ordered to reduce their multifamily activity by 10 percent. Yet, even as housing finance reform legislation proposing the elimination and replacement of the government-sponsored enterprises (GSEs) is introduced, Durning believes the multifamily industry has little cause to worry.
“A 10 percent reduction would have been more noteworthy in terms of its impact on the industry if it had happened in a time where the overall GSE production in multifamily was maybe at a low point, or even an average point,” he says.
Durning adds that the reduction is based of the largest year the GSE ever had in 2012, so even after you factor in the reduction, you end up with a sizable overall volume anyway.
“They’re still going to be the major, driving dominant factor of multifamily finance,” Durning says. “What’s noteworthy about it is more so the questions it raises about what will happen next. And the role of the policy folks in determining the role of the GSEs.”
Despite the saber-rattling going on in the halls of Congress, Durning believes the government will continue to have a real interest in multifamily finance, and the belief is that the GSEs, no matter how they evolve, will continue to have a unique role to play in the market.
“We believe that going away is just really unlikely,” Durning says. “They may go away in name, but the role that they play will evolve. And their successors will evolve in a vacuum that’s needed here.”