Matthew McGovern
Director, GRS | Corteq
(646) 760-0851
[email protected]
GRS Group played a significant role at the recent Bisnow Multifamily Annual Conference in Washington, D.C. GRS | Corteq’s own Matthew McGovern a New York City-based director at the firm, served as moderator of a panel that tried to answer what is on every many commercial real estate professionals’ minds: What is next for Fannie Mae and Freddie Mac?
On McGovern’s panel were David Brickman, executive vice president for the multifamily business at Freddie; Bryan Cullen, managing director at Hunt Mortgage; Michael Edelman, senior vice president at Capitol One Bank; and Scott Park, senior managing director at Pillar Finance. Following are McGovern’s main takeways from the panel discussion.
“Albeit the GSEs started slow in 2104, they finished very strong, as indicated that by October, their pipeline had almost doubled. There is momentum going into 2015, which would be expected to be buoyed by several new initiatives rolled-out by Freddie Mac, including: Float-to-Fixed Loan, which provides borrowers with superior cash-on-cash returns through the first two years of the loan, while locking in a low, fixed-rate coupon for its laster year; a Lease-Up Loan on newly constructed properties allows borrowers to lock in a rate and fund a loan before the collateral is fully stabilized; and a Value-Add Loan, which provides flexible, cost-effective acquisition financing, allowing for moderate property upgrades during the term of the loan; and, Small Balance Loan products.
As far as positives for the GSEs future, it import to remember that from 2007 to 2010, when the bottom blew out on capital markets, Fannie and Freddie were the lenders of last resort and filled a void. They accounted for as much as 90 percent of the multifamily debt during this tough period. As a result, the presence of Fannie and Freddie should be viewed favorably. All expectations are that they strive to emerge from conservatorship.
Recently we have seen consolidation in the mortgage-banking industry, and there appears to be a shift away from the traditional independent mortgage banker. All three mortgage bankers on the panel were from firms that were subjected to consolidation or takeover. While it would appear to be a graying of the line between the traditional mortgage banker to the Wall Street banker, many of the acquisitions have resulted in expanded product lines, larger balance sheets, and increased efficiency. Mortgage bankers on the panel still espouse the value of their traditional role of fostering great long-term relationships with their clients.
Clearly the consensus was that if borrowers are on the fence about refinancing, the time is now to take advantage of this ultra-low interest-rate environment.”