Herman & Kittle Properties, Inc., has been using Fannie Mae programs more in the last 18 to 24 months, said Todd Sears, vice president of finance for the Indianapolis-based builder and developer. The firm closed a tax-exempt bond deal using Fannie Mae’s unfunded forward commitment program in mid-2005, “and that was the first deal we had done in a few years with either of the agencies,” said Sears. “That really started a process where we began to look at them more consistently on our 9 percent deals.”

The company has three deals in various stages of due diligence for Fannie Mae and Freddie Mac permanent loan arrangements.

A combination of factors prompted the developer to look at agency lending programs again. As the equity market heated up, more equity investors were asking for fixed-rate financing that was locked in at closing on a 9 percent deal.

“The Fannie and Freddie forward commitment programs were perfectly designed for that,” said Sears. “The investors wanted 15-year commitments and the Fannie/Freddie programs could deliver that.”

Sears sees a renewed focus at the government-sponsored enterprises (GSEs), both in terms of product and process improvements.

“They’ve made some innovations—they started doing unfunded forwards, they began to make changes to their tax-exempt bond programs,” he said. The GSEs have also increased their flexibility in the last few years. If an issue pops up that falls outside of the GSEs’ guidelines, and “if there’s a good reason for it and it doesn’t dramatically change the risk profile of the transaction, there just seems to be more consideration given to that than there might have been a year or two ago,” said Sears.

R. Lee Harris, president and COO of Cohen Esrey Real Estate Services, Inc., does a lot of business with Fannie Mae loans, pointing to the consistency and reliability of the GSE’s programs. Harris believes the agencies offer competitive products and serve the needs of the industry, though at times they can test one’s patience. “When we’re in the heat of battle, we’re always wishing that things would move more quickly, that we didn’t have to fill out so many papers and all that,” he said. “But on balance, they’re as good as anybody else out there.”