MF Originations Fall 42% Year-Over-Year in 2Q 2008; Wachovia, WaMu Were Top Lenders in 2007

By Anuradha Kher, Online News EditorWashington, D.C.–Multifamily lending increased 7 percent between 2006 and 2007, from $137.9 billion to $147.7 billion, but fell steeply in the first half of 2008, according to the Mortgage Bankers Association (MBA).   The number of multifamily loans decreased by 5 percent, from 50,959 loans in 2006 to 48,577 loans in 2007; the average loan size increased by 11 percent, from $2.7 in 2006 to $3.0 million in 2007, according to MBA’s latest report.”2007 saw strong multifamily lending activity, but the market is changing significantly,” Jamie Woodwell, MBA’s vice president of commercial real estate research, tells MHN. “In just the last two weeks, we’ve seen announcements of 2007’s two leading multifamily lenders – Wachovia and Washington Mutual – being absorbed into other institutions.”“This is a diverse market with a small number of lenders who do large deals and small lenders who do a large number of small deals,” says Woodwell. “2008 is already showing decreases. There has been a 42 percent decline in multifamily originations in the second quarter of 2008 as compared to the second quarter of 2007,” says Woodwell. In 2007, 2,739 different multifamily lenders provided a total of more than $147.7 billion in financing for apartment buildings with five or more units. Lenders closed 48,577 individual loans, with an average loan size of $3 million. The average lender made 18 multifamily loans over the course of the year. In terms of total dollar volume, the top five multifamily lenders in 2007 were Wachovia, Washington Mutual Bank, Deutsche Bank Commercial Real Estate, Capmark Financial Group, Inc., Wells Fargo Bank, N.A. The top three lenders in terms of the number of multifamily loans closed were Washington Mutual, Wells Fargo Bank N.A., and Wachovia.   MBA’s 2006 Annual Report on Multifamily Lending found 2,761 lenders making multifamily loans, compared to 2,739 in 2007 – a one percent decrease. Average number of loans closed per firm remained the same at 18.Even though financing multifamily projects is becoming harder, Woodwell says that multifamily loans have been good investments for banks and despite everything it is a good sector to be in. “All the steps taken by the government recently to help banks are geared toward helping lenders find capital and multifamily is a strong contender for those dollars,” concludes Woodwell.