Your Multifamily Lending Update by EM CAPTIAL LLC.
Here’s the latest news from the major multifamily lenders:
GSE: Fannie and Freddie are expecting a strong end to the year as we mark the start of the 4th Quarter. Inflows remain strong at both GSE’s but there have been extended response times due to high volume and the desire for borrowers to lock rates prior to the election.
Fannie: Fannie Mae continues to aggressively compete for and win over “green business” and in addition to their low leverage fixed-rate products.
Freddie Mac: ARM activity at Freddie Mac has shown signs of continued growth, as we transition to SOFR borrowers have taken note that the SOFR cap costs are now less expensive than
CMBS: Getting back to a liquid market. The two new issuances saw 5 bps improvement in spreads on AAAs and about 40 bps of tightening on BBBs. Tightening can be partially attributed to the bond scarcity; it is indicative that bond buyers having an appetite for commercial mortgage paper. This scarcity is a result of lacking loan production.
Life Insurance Companies: Activity remains strong as though many lenders are well behind their 2020 production goals. This has resulted in fierce competition. Interest rates for CM1 business (sub 60% LTV) are in the very low 2% range and for CM2 business (60-70% LTV) are in the mid to upper 2% range. There are a subset of lenders that are seeking coupons above 3% and are willing to take on incremental risk.
FHA/HUD: As HUD closed its fiscal year, production reached record annual levels. HUD has created a new queue for its underwriting in the regions. Quite simply, there are more deals than HUD can get through. HUD is now investing in their processes and automation efforts. working to find ways to continue to streamline its process by removing unnecessary steps in its underwriting processes.
