Lifting of Fannie, Freddie Caps Will Be Good for Multifamily
- Mar 24, 2008
By Anuradha Kher, Online News EditorThe regulator of Fannie Mae and Freddie Mac, the Office of Federal Housing Enterprise Oversight, recently eased a major restriction on the companies in an effort to unfreeze credit markets and stabilize housing prices. Starting April. 1, the mortgage limits on loans the two outfits can guarantee will rise from $417,000 to $729,750. The caps on their portfolios have also been lifted.“This is all coming off as positive news for the multifamily market,” Cheryl Patton Malloy, senior vice president of Multifamily and Governance at the Mortgage Bankers Association (MBA) tells MHN. “All Fannie and Freddie multifamily loans go into portfolio, so this is good news for the two companies. Fannie and Freddie would be hitting the caps if not for this loosening measure.”In addition, by reducing the capital surplus level from 30 percent to 20 percent, the regulator will provide up to $200 billion in immediate liquidity to the distressed mortgage-backed securities market. “This would mean more multifamily loans,” says Malloy.The higher limits, which expire at year-end, could breathe new life into high-priced markets like California and the East Coast by making it less costly to finance expensive condos.