GSE & Privatization: How do you think they MF lending realm will be affected?

GSE's are going private. I read through the Treasury plan dumped on Friday, definitely sounds like Multifamily is going to be bearing the brunt of the blow.

General Outlines:
- Recap the GSE's so they have adequate Liquidity
- Increase the spreads so that it creates more competition within the private sector
- **Refocus lending on mission housing for "low to moderate income and underserved renters". **This will include reducing acquisitions that don't meet the target. Reducing the cap or going to a market % based cap. Elimination of the green program (this one needs to go for sure).
- Inquiry about removing the governmental guarantees backing the MBS originated through the GSE's. They've also floated the idea of separating the SFR from the MF into two seperate entities because they think MF can handle secondary mortgage securitization without implicit government backing.

All you monkey's complaining of the gorilla GSE's might finally be getting some reprive. I just hope that I still have a job.

We will know more once the scorecard gets released in the near future.

Comments (21)

Sep 9, 2019

No impact, good news for everybody

CEO can go back earning $20m a year like they did pre-conservatorship. business is always good regardless of volume cap, and GSE can still make same or even more profit with a lower cap.

    • 1
Sep 10, 2019

for the past 3 weeks, we are seeing 10 times more multifamily in CMBS. I am told the reason for this is largely because the agencies are hitting their caps early this year. So, cmbs, banks and life cos are trying to fill in the void. Our pricing has not changed in CMBS, so we are still in the mid to high 3's for MF and so we are being competitive. I am told agencies have increased their spreads and being very selective now. The team here would love to do more MF and not just retail and hotels like we usually do.

Sep 10, 2019

Can confirm this as well.

Sep 10, 2019

Yeah, they're pretty close to their cap. Just like all lenders in this situation, they increase rates and cherry pick.

Sep 10, 2019

In July, pricing on a typical 75% LTV deal on 10YR terms was around 190ish (assuming some pricing waivers).

Since the end of July, the GSE's have raised pricing 6 times. Practically eliminated the green benefits and reduced all pricing waivers. Now, pricing on a typical 75% LTV deal is 265bps, with no pricing waivers. Typical coupons for deals are around 4-4.2%.

Learn More

Side-by-side comparison of top modeling training courses + exclusive discount through WSO here.

Sep 10, 2019

Price widening isn't directly tied to the cap. The pullback in green and "lowercase "a"" affordable business indicate such since both of these products fall into their uncapped bucket.

Both agencies are rushing to manage total production volume as they aim to downplay their total market share. If you read the Treasury's reform plan you will see that their recommendation implies exactly that:

"Treasury and FHFA should consider amending each PSPA to limit
support of each GSE's multifamily business to its underlying affordability mission,
including potentially through a revised framework for capping each GSE's multifamily
footprint".

Sep 9, 2019

You have a link to the Treasury Plan and where it says this?

Sep 10, 2019
Sep 10, 2019
Sep 9, 2019

GSEs have been going private for like 7 years now

    • 1
Sep 10, 2019

The Senate Banking Committee is currently discussing the Treasury Plan (https://home.treasury.gov/system/files/136/Treasur...) to take the GSE's private.

The GSE's are also going to begin to keep all their quarterly generated cashflows in order to help them recapitalize prior to going back private.

Sep 10, 2019

I'm aware - it's just various governmental bodies, political figures, etc. etc. have murmured about privatizing them since as long as I can remember and here we are. A discussion in the US political apparatus is so far from a done deal.

Sep 11, 2019
Comment