Your Multifamily Lending Update by EM CAPTIAL LLC
Inflows remain strong at both Fannie and Freddie.
COVID-19 has brought small loans down for multifamily investors as small loans constituted a higher percentage of loans requesting forbearance. Repayments are occurring and Fannie and Freddie continue to lend actively.
Fannie Mae: Fannie Mae has a new 5-5 variable rate ARM product with an embedded cap, a 5-year loan term, and an optional extension for a second 5-year term. They recently released information about their transition to SOFR as the LIBOR standard is being dropped.
Freddie Mac: Freddie has also released information about their move to the SOFR. They remain competitive within the market and continue to lend actively.
CMBS: The CMBS conduit market is moving along but far from recovery.
The secondary market is tightening across the capital stack. Loan spreads have remained consistent with bond pricing. Full leverage currently sits at 65%-70% LTV and spreads at about 300 basis points. New conduits still have a mix of legacy loans and “post crisis” originations. As loan production remains slow fewer bonds are expected to enter the market and those coming due may be smaller going forward.
Life Insurance Companies: Now pricing at all-time lows. The life sector has stabilized as lenders remain well capitalized. Leverage remains below pre-COVID-19 but is signaling small increases. Minimum debt yields for aggressive lenders hover around 8%.
FHA/HUD: Record setting volume remains. The FHA continues to outsource as many regions are hitting capacity and some loans remain unassigned HUD recently confirmed that their commitment authority is $30 billion, and they will not run over for this fiscal year ending September 30th.
