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FANNIE MAE AND FREDDIE MAC MULTIFAMILY OUTPERFORM SINGLE FAMILY AND PROVIDE ESSENTIAL FUNCTIONS FOR MORTGAGE MARKETS

FANNIE MAE AND FREDDIE MAC MULTIFAMILY OUTPERFORM SINGLE FAMILY AND PROVIDE ESSENTIAL FUNCTIONS FOR MORTGAGE MARKETS|Uncategorized|October 4, 2010

Boston, Massachusetts, October 4, 2010 – Recap Real Estate Advisors, provider of real estate advisory services for multifamily housing, today issued a report that highlights the essential functions that Fannie Mae and Freddie Mac, the government-sponsored entities (GSEs) play in multifamily mortgage markets. Not only have the GSEs provided essential liquidity during the financial crisis, but their multifamily operations have performed far better than their troubled and well-publicized single-family mortgage portfolios, as shown by default rates.

Fannie Mae and Freddie Mac play an integral role in the development and refinancing of multifamily housing nationwide, Recap concludes, and cautions that any GSE reform—which will be debated in Congress over the coming months—should maintain the essential functions for multifamily markets that Recap identified are currently provided by the GSEs and nowhere else.

In the report commissioned by the National Housing Conference, “Government-Sponsored Enterprises and Multifamily Housing Finance: Refocusing on Core Functions”, Ethan Handelman, David A. Smith, and Todd Trehubenko establish several key principles for any proposed reconfiguration of the GSEs’ functions:

• An explicit government guarantee will continue to be essential for drawing in capital and providing liquidity.

• Most of the GSEs’ business should be packaging loans for capital markets, although they will need a limited ability to hold loans in their portfolios.

•  Strong government regulation is also essential, not only to ensure safety and soundness, but also to ensure that capital is available for underserved market segments such as rural housing, affordable housing, and smaller developments.

•  GSEs should provide liquidity broadly, for both conventional and affordable housing.

•  Loan origination should depend on existing proven models.

•  Multifamily liquidity can function with various possibilities for GSE reform, but the scale of multifamily markets can only support a small number of multifamily GSEs, which are likely to have limited if any private ownership.

“Multifamily should not be overlooked in the GSE reform effort,” said Ethan Handelman, Recap Vice President. “Apartments house more than 15 million American households. Multifamily mortgage markets rely on the basic liquidity provided by the GSEs to create housing in ways that other capital sources simply don’t. However GSE reform plays out, Congress should ensure that adequate capital continues to flow to the critical multifamily market.”

The National Housing Conference commissioned Recap to analyze and explore the current state of multifamily housing financing, in order to inform policy debate on the future of the GSEs. An electronic version of the report is available by emailing info@recapadvisors.com.

About Recap Real Estate Advisors

Recap Real Estate Advisors is a Boston-based firm that provides real estate advisory services for multifamily housing. It is the financial services and asset management group of Consolidated American Services, Inc. For more than two decades, Recap Real Estate Advisors has worked with multifamily owners, investors, lenders, and regulators to execute cutting edge transactions, stabilize and reposition properties, and design innovative programs and strategies. The firm has completed transactions on more than 800 properties nationwide, with aggregate property value of more than $2.7 billion. On-Site Insight, a Recap Real Estate Advisors Company, has performed more than 6,500 capital needs assessments. Visit www.recapadvisors.com for more information.