Fannie Mae Multifamily Investment Drops During First Half 2010

Dees Stribling, Contributing Editor

Washington, D.C.–During the first half of 2010, Fannie Mae, through its lenders and various other partners, provided $5.9 billion in investment to the multifamily rental housing market. That compares with $10.1 billion in multifamily investment during the same period in 2009.

The lower figure probably represents a drop in activity in the multifamily sector more than a decline in the GSEs’ willingness to be involved in the sector. Last year, Fannie Mae Multifamily began pumping up its MBS business by focusing its efforts on securitization and broadening its investor base. Currently, the GSE provides liquidity to the multifamily market mainly through MBS issuance, which accounts for the vast majority of Fannie Mae’s multifamily activities.

Of the $5.9 billion invested by Fannie Mae in the first half of 2010, $5.5 billion was delivered through MBS execution, or about 93 percent. The dollar total MBS execution by Fannie Mae during 1H09 was higher–$7.1 billion–but the percentage of GSE’s total activity in MBS was lower, about 70 percent.

This week, Fannie Mae CEO Michael J. Williams asserted, in a speech to Women in Housing Finance, that the company is “building the strongest book of business we’ve seen in the last decade,” stressing Fannie Mae’s emphasis on underwriting fundaments.

Though Fannie Mae and its sister entity Freddie Mac aren’t covered by the new financial reform law, pressure is building to do something about them, which have been controlled directly by the Federal Housing Finance Agency for nearly two years. The Obama administration will float a plan to reform the GSEs early next year. No one is expecting a quick fix, however.

Williams didn’t comment on any potential structural changes to Fannie Mae during his speech. But he did acknowledge that “change is coming” to the GSE.