Original Article: October 31, 2019 GlobeSt.com
Experts on the finance panel at GlobeSt Apartments said the new Fannie/Freddie caps revived certainty in the agencies.
Fannie Mae and Freddie Mac announced new lending caps last month. Starting October 1, the agencies have new caps of $100 billion for each agency. At the GlobeSt Apartments conference this week in Los Angeles, speakers on the Financing Strategies: Developing an Approach that Meets your Goals panel said the announcement has revived certainty in the market.
“It is fantastic for everyone in this room to have the certainty in place for the next five quarters,” said Burns on the panel. The agencies have a new regulator, and there was nervousness in the market about how the regulator would approach the business. In fact, there was such uncertainty, lending activity came to a screeching halt in the agency business. “Now, they have set out clear guidelines,” added Burns.
The new guidelines include getting rid of the separate green program so that all lending is under the lending caps. They also put a mandate that 37.5% has to qualify as affordable housing, which is roughly in line with the current rate. The new announcement has been well received by the market. “There is certainty now, and we have seen in the last few weeks that they have turned the spigot back on,” said Burns.
According to Reed, the new announcement will fuel lending activity through the end of the year and will ensure there is good liquidity in the market. “The approach simplifies the way that they are giving capital and makes them a little more like a life company in the way that they are deploying capital,” he said.