Why do some banks like BOA or Deutsche not have Freddie/Fannie licenses?
Out of the 25 or so lenders that have freddie or fannie licenses, they are predominantly non bank lenders like Berkadia, CBRE, Northmarq, Hunt. The few banks that have either Freddie or Fannie license are Wells, PNC, Capital One, Citi, JP Morgan. Why dont most banks have them?The reasons I could think of are:
With the strength of their balance sheet, banks believe that they can compete with the non bank lenders and dont necessarily have to securitize.
Having a freddie or fannie license requires origination of high volume of multifamily loans. And banks might want to shy away from being a volume heavy shop that is just pumping out loans, they would rather focus on the relationship aspect of the business focus on collecting deposits and sell other products on top of loans to their customers. Plus, banks would much rather focus on short term construction loans, interim loans that give them higher yield as opposed to long term fixed rate loans for stabilized properties, so this might just be a space that they dont want to compete in.
Any other reasons that I am not seeing? Thank you!
Why be correspondent with Fannie/Freddie when you can just sell the paper to them.
Relationship lending is a regional bank thing. Wells/Chase don't care about your deposits.
Thank you! So, when national banks dont care much about deposits from customers why doesn't BOA or Deutsche have Freddie/Fannie licenses when they can securitize and reduce their risk and not hold loans on their balance sheets.
One is they have to get the license, which they could but there is a reason only 25 or so have it. Banks are banks, they are not in the business of correspondent lending just as Fannie/Freddie are not in banking.
Ask a kitchen and bath contractor to install your solar.
Again, these banks are selling some loans to Fannie Freddie then servicing on the back end. They sold the paper for a nice SRP and got the servicing.
Have you ever brokered a loan to a Fannie lender vs a Bank? Fannie/Freddie have their own standardized forms and so does BofA, Wells, Etc. It's not like resi lending where all the forms are the same to apply for a loan. BofA has their people make their forms just as Fannie Freddie do too. BofA isn't going to have two sets of loan packages in house in order to originate direct with Fannie/Freddie...
Lastly, Fannie/Freddie is a product pretty much developed for lenders (Hunt, CBRE, Etc) to offer to brokers. Not banks to borrowers.
Newbie question, why do some big banks like Chase or BOA not have a Freddie license for multifamily loans? (Originally Posted: 01/12/2018)
Is there something that I am missing or is multifamily not their main priority when you have so much competition from lenders likes Berkadia. Because, given the choice would not a lender want to sell the loan to Freddie as opposed to keeping it on their balance sheet. I also see several other big banks like Citi and Deutsche not being Freddie approved lenders. Appreciate any help so that I can understand the rational here.
bump
The big banks mostly just focus on construction and bridge lending because the spreads, returns on equity are higher, and terms shorter. Some banks elected to have a agency group but if you don’t it’s not worth it building one from scratch due to the competition.
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