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Government Sponsored Enterprises Grew Multifamily Loans in 2015

January 14th, 2016 Comments off

freddie mac  globest   creditGSEs Fannie Mae and Freddie Mac both increased their multifamily loans and credit enhancements business in 2015, totaling $89.6 billion on the year. Freddie edged out Fannie in volume, with Freddie writing $47.3 billion, a 67 percent increase from 2014’s $28.3 billion, while Fannie reported $42.3 billion, a 46% increase from the $28.9 billion mark set in 2014.

Of Freddie’s new business volume, $17 billion was not subject to the FHFA $30 billion cap and was used for manufactured home loans as well as for senior housing, smaller multifamily projects and affordable housing.

David Brickman, executive vice president for Freddie’s multifamily, said, “Our financing is in every corner of the multifamily market and more diverse than ever. We are focused on increasing the availability of mortgage capital, especially to the affordable and workforce housing sectors where demand continues to far outstrip supply.”

Ninety percent of Freddie Mac loans support rental units for low- and moderate-income households. Further, the majority of the $47 billion purchased in multifamily mortgages were then securitized transferring most of the credit risk from taxpayers to private investors.

At Fannie Mae, Bob Simpson, vice president of affordable, green, and small-loan business at the company, said last year there was considerable growth in in its affordable housing loans.

We rolled out a competitive bridge-loan product this year called the ARM 7-4,” Simpson said in September. “Basically, it provides borrowers with a seven-year, variable-rate loan with a 4% embedded cap. It comes with a one-year lockout, a 1% prepay premium, and a fixed-rate conversion option. We’ve seen a tremendous amount of growth with this product for preservation deals because it provides borrowers with the flexibility of a bridge loan so they can acquire a property and turn it into a tax credit deal a year or two down the road, or they can convert it to a permanent fixed-rate loan if their plans change.” ##

(Photo credit: globest–Freddie Mac headquarters)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

FHA Reaching Back to Borrowers with Lower Credit Scores

September 12th, 2014 Comments off

fha logoThe Federal Housing Administration (FHA) wants to reach out to borrowers with credit scores of 640-680 because lenders have pulled back from that borrower class over the last ten years, according to Frank Vetrano, of FHA’s risk management and regulatory affairs division, noting the housing downturn took many of these people out of the home buying market. The agency is also cautioning lenders to make fewer mistakes when writing mortgages. Lower credit scores and the possibility of default for which the lender may be penalized is already pushing some lenders away. The FHA expects 75 percent of its loans will be made to borrowers with FICO scores of 680 or below, according to nationalmortgagenews.com.

The FHA says of 6,645 loans it reviewed in Q1 2014 only 16 percent had no mistakes, while 48 percent were unacceptable and 36 percent were deficient but potentially correctable. Banks can be liable for treble damages under the False Claims Act if they falsely certify that a mortgage meets all FHA requirements. Since 2013 the FHA has deliberately moved away from those with credit scores of above 680, ceding market share to Fannie Mae and Freddie Mac. As MHProNews posted Sept. 11, for the first nine months of the government’s fiscal year ending June 30, FHA originations fell 47 percent from the same period of 2013, due to rising insurance premiums. ##