Near Record Fannie Multifamily Investments as S&P Says Sector Souring
Fannie 2002 multifamily investments more than $22 billion January 24, 2003 By CHRISTY ROBINSON |
Fannie Mae announced that in 2002 it nearly matched its record multifamily investments, even though Standard & Poor’s Ratings Services (S&P) also announced that the multifamily housing sector has been declining financially.
Fannie’s investments in that sector reached more than $22 billion last year, almost meeting its record from 2001despite the 20% to 30% decline in the market. S&P said the rate of new 30-day multifamily delinquencies increased quite a bit during the third quarter, and as a result, the multifamily delinquency rate is expected to rise in the months ahead. These delinquencies will take place in weak apartment markets that are experiencing high vacancy, low rents, and abundant supply, said Joan Biro, co-author of the S&P report. Even with the currently highest vacancies and reduced rents, the delinquency rate for loans in rated multifamily transactions declined in 2002, “but $240 million of multifamily loans are in special servicing, reflecting an imminent default by the borrower,” she said. Fannie spokeswoman Betsy Hildebrandt said the mortgage giant had a stronger year than it expected. She said the company did well because of enhancements to products and hard work in the small loan area. S&P spokesman Joseph Hu said that when a company is said to be “doing well,” that has to be put into context, such as in terms of cash flow. He said that maybe the multifamily sector has been positive for Fannie’s portfolio, but fundamentally the sector has declined. “From a vacancy point of view, it’s a record high. But the future is promising,” Hu said. S&P expects demand for multifamily housing to increase within the next five years because of demographic factors and an improved economy. The demographic factors include baby boomers and their offspring, the 25- to 29-year-old echo boomers, seeking apartment rentals, the announcement said. Fannie said in its announcement that it committed in 2000 to investing $18 billion over the next decade to creating a larger financing market of small multifamily properties. In 2002, Fannie reportedly financed $4.1 billion in small loans, which included $2.25 billion in structured transactions. The government-sponsored housing enterprise financed more than 460,000 multifamily units last year, 90% of which are affordable to consumers who are at or below the median income of their communities, the announcement said. The company’s multifamily assets total more than $95 billion and include multifamily mortgages purchased for cash and multifamily mortgage-backed securities. |
Christy Robinson is the editor of MortgageDaily.com. She received a bachelor’s degree in news-editorial journalism from The University of Texas at Arlington. Her work has previously been published in The Dallas Morning News. email Christy at: [email protected] |
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