Multi-Housing Forum Gives Industry Members an In-Depth Look at Building Challenges, Financing Options

Multi-Housing News‘ parent company, Nielsen Business Media, sponsored an event in Chicago today called Multi-Housing Forum, featuring sessions on branding, debt and more.

I attended the forum’s very compelling 2 p.m. session, "The 2008 Multifamily Debt Update," which was an interesting look at how GSEs are navigating the current market–a hot topic for the multifamily sector.

During the hour-long session, moderator Glenn Housman, Senior Vice President, Richard Ellis Inc., took questions and chatted about financing options and advice along with Freddie Mac Senior Producer Laura Cathlina and Jimmy Mayfield, managing director of Greystone Servicing Corp.

A few highlights:

  • 125 on they way: Starting May 1, the new 125 percent regulation goes into effect at Fannie Mae–and Housman advised audience members looking at a refi to get their items in order "lickety-split." (Freddie Mac has yet to confirm its participation, Mayfield said.)

  • Rate locks are working "very fast" these days, according to Cathlina.
    And with Freddie Mac, the deal is a deal when the lock is in place.
    "Once we rate lock, we’re rate locked," she said. "If something comes
    up in the marketplace, we’re not going to come back and change it."
  • Price saver tip: Points are negotiable from lender to lender, as are processing fees and all other "nickle-and-dime issues," Housman said, pointing out that with a Freddie Mac loan, "Laura is controlling the deal–but not all costs."
  • Shopping around: Housman advised participants to keep in mind
    that to an extent, you can get different quotes from different lenders.
    However, he reminded the crowd that there are limitations to that rule.
    "Once it’s in Laura’s system, you can’t [cancel it] until you write a
    letter and say ‘I want to switch,’" he said.
  • Looking to get in and out of a deal in a few years? Consider Freddie Mac’s ARM program, rolled out five years ago. "If you know you want to purchase a property and be out of it in five years, that’s the best program for you," Housman said.
  • Know your schedule. A 365 schedule compared to an actual 360 is not "apples to apples," Housman said. One is based on 365 days, the other–which is quoted more often–is based on 12 30-day months. A 360 will include more days, but usually offers a better interest rate, Housman said.
  • Size limits? Call Fannie Mae, which is set up to handle them efficiently. "No deal is too big," Housman said. "A billion, $2 billion, they can do it." According to Mayfield, Fannie defines a small loans as "$3 million or less in most markets. In larger markets such as Chicago, $5 million or less."

Aside from helpful tips and GSE news, the session contained one other general theme: Fannie and Freddie are doing just what they’re supposed to, according to Cathlina.

"Fannie Mae and Freddie Mac are both publicly held," she said. "Our first obligation is to our investors."

That said, they were formed to add liquidity to the market–and have. "In the past nine months, we have been doing just that," she said. "Exactly what we were created to do."

The agencies have both come under fire in recent month for various reasons–but they’ve also been given more lending power to help troubled homeowners. And their influence in the multifamily market can’t be denied: Last year, both GSEs provided $60 billion collectively just to the apartment market, Housman said.

Their role will undoubtedly grow as the market increases–and lenders continue to tighten restrictions. Have you considered Fannie or Freddie financing options? It may be time to …