CRE Finance Council is a trade association that is...

  • Dedicated exclusively to the nearly $6 trillion commercial real estate finance industry
  • Committed to promoting strong & liquid debt markets across platforms
  • The meeting place for industry professionals
  • The platform for establishing best practices, industry standards & federal policy
  • Comprised of approximately 400 companies and 19,000 individual members

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News

Forum Spotlight: GSE/Multifamily Lenders

November 5, 2024

Ahmed Hasan (Forum Chair), David Haynes (Chair-Elect), and Kate Whalen (Past Chair), as well as Jason Griest and Alonzo White (both GSE representatives), form the “Leadership Working Group” of CREFC’s GSE/Multifamily Lenders Forum. This group sets agendas and priorities for the Forum and represents their constituencies on CREFC’s Policy Committee.

Key GSE/Multifamily Lenders Focus Areas:

  • Sustained elevated interest-rate environment and the uncertainty of how quickly, or if, long-term interest rates will change
  • Investor appetite for increased agency issuances
  • Upcoming presidential election and 2025 FHA scorecard/updates that may impact 2025 business

What They Are Saying: The GSE multifamily sector continues to stand out as an area of strong credit despite the challenges of a sustained high-rate environment and the impact inflation has had on property performance.

The GSEs have seen a significant increase in multifamily mortgage originations in the second half of 2024. The uptick is driven by:

  • A decrease in U.S. Treasury rates and
  • Increased investment sales activity.

Despite the current volatility in economic data and benchmark rates, there is optimism that the momentum will continue and the market expand in 2025.

By the Numbers: CREFC polled the audience at its June 2024 annual conference and found that 56% of participants expected GSE multifamily issuance to end 2024 north of $100 billion. Today, that expectation likely will come to fruition, thanks to a significant increase in originations spurred on by a sharp third-quarter decrease in U.S. Treasury rates.

CREFC June Conference Poll: Agency Production Volume 2024 Forecast

Key Forum Policy Issue: Tenant Protections

In July 2024, FHFA issued a new policy for multifamily properties financed by the GSEs to include a minimum of a:

  1. 30-day notice of a rent increase
  2. 30-day notice of a lease expiration
  3. Five-day grace period for late rent payments

These standards will go into effect for all new loans on or after February 20, 2025.

What’s Next: CREFC’s DC Symposium on Nov. 13 will feature a conversation between Freddie Mac CEO Diana Reid and Bob Foley, Partner, TPG Real Estate and Chief Financial Officer, TPG RE Finance Trust, Inc. Mr. Foley is also the acting Chair of CREFC’s Board of Governors. Symposium attendees are sure to be keenly interested in the housing agency CEO’s perspectives on key issues impacting the industry and how Freddie Mac provides liquidity, stability, and affordability for housing in communities nationwide.

GSE Forum leaders look forward to presenting CREFC members with an update on their forum at CREFC’s January Conference in Miami, to be held from January 12-15, 2025.

As June 2025 approaches, the chairs will seek nominations for the next Chair Elect to join their leadership slate. To join the GSE/Multifamily Lenders Forum, please register here.

Please contact Rohit Narayanan (RNarayanan@crefc.org) with any questions

Contact 

Rohit Narayanan
Managing Director, Industry Initiatives
646.884.7569
GSE/Multifamily Lenders Forum Leadership
Fall 2024
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Forum Spotlight: GSE/Multifamily Lenders
November 5, 2024
Ahmed Hasan (Forum Chair), David Haynes (Chair-Elect), and Kate Whalen (Past Chair), as well as Jason Griest and Alonzo White (both GSE representatives), form the “Leadership Working Group” of CREFC’s GSE/Multifamily Lenders Forum.

News

Election Night Guide

November 5, 2024

On this Election Day, as the nation awaits the results of its presidential election and various races for seats in Congress, remember that not all states may have final vote counts because of factors such as processing mail-in votes. There may be, however, some early indicators that suggest which party is faring well even before the final ballot has been accounted for.

Below are a few early signs to look for to ascertain which party is doing well before all the results are tallied.

President: Vice President Kamala Harris or former President Donald Trump need at least 270 electoral votes to win, and most paths to victory run through the swing states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin.

North Carolina is a competitive swing state this year, as President Trump only won it by just over 74,000 votes or a 1.4% victory margin in 2020. Polls close at 7:30 PM ET.

  • Watch the vote counts in the suburbs of Charlotte, Raleigh, and Greensboro to see how well Harris’ message is resonating.
  • If Harris runs up the vote count enough in these populous centers of the state, she has a chance to win. However, if Trump eats into her margins in the cities and the surrounding suburbs, it could spell trouble for the Democrats.

Florida counts its votes very quickly and its results should tell us much about where the candidates stand going into the final stretch. Polls close at 7:00 PM ET.

  • While Trump is expected to win the state for a third time (2016 by 1.2% and 2020 by 3.3%) the margin of victory may be an early barometer of national sentiment.
  • Trump’s margin and his performance in large population centers, like Miami, Orlando, Tampa, and Jacksonville will be highly scrutinized. The results will be another indicator of how effectively the Harris campaign is making inroads with the voters she needs to win the White House. A better-than-expected performance by Harris in the sunshine state could suggest Harris does well in other states.

House: Republicans currently control the House of Representatives with a 220-212 margin and three vacancies. Democrats need to flip just five seats to regain control of the chamber going into the next Congress.

The Cook Political Report rates 22 seats as toss ups, which is less than 5% of the total seats in the chamber. Most election predictions have the odds of control for each party at 50-50.

Virginia’s 2nd and 7th Congressional District results could prove to be early indicators of how each party is performing nationally, and where control of the House may be headed.

  • These two swing districts were reliably Republican prior to the 2018 midterms when Democrats won both amid a wave of anti-Trump sentiment. However, Republicans retook the 2nd district in 2022 and came close to winning in the 7th district.
  • Retiring Rep. Abigail Spanberger (D-VA) has held the district since 2018 and is retiring to run for Governor. She won in 2022 by a margin of 52-47%.
  • The 2nd district is held by Republican Jen Kiggans who took office after the 2022 midterms, defeating Democrat Elaine Luria by a margin 51-48 %.

Senate: The Senate is controlled by the Democrats with a margin of 51-49.

  • The tight margin gives Republicans the clear advantage in retaking the chamber.
  • With a guaranteed pickup in West Virginia and likely pickup in Montana, the GOP is expected to control the chamber, but the question is by what margin.

The Senate elections in Michigan, Ohio, Pennsylvania, and Wisconsin are all rated as toss ups by Cook Political Report. If any of these seats is won by a margin greater than 3%, it will be viewed as an early indicator of success for the corresponding party nationally.

Ohio: Senator Sherrod Brown (D-OH) is trying to win re-election in a state that voted for President Trump by an 8% margin in 2020. If Brown holds on to his seat or even loses by a narrower-than-expected margin, it will be a good sign for Democrats across the country.

The bottom line: The election could take days to be settled. In 2020 the election wasn’t officially called until Saturday, Nov. 7, four days after Election Day.

Mail-in voting reached a historical high in 2020, when 46% of all votes tallied, or around 72 million votes, were cast via mail, amidst the pandemic.

  • The percentage of mail-in ballots is expected to have declined from 2020, however large-scale mail-in voting will cause some inevitable delays in declaring a winner.
  • States like Pennsylvania and Wisconsin don’t begin counting ballots until Election Day. For a full list of how each state processes its mail-in ballots, click here.

Be patient, as a similar waiting period is likely this time around. Click here to see when the AP called each state last cycle.

Please contact James Montfort at Jmontfort@crefc.org with any questions.

Contact 

James Montfort
Manager, Government Relations
202.448.0857
jmontfort@crefc.org
Polling station sign door
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Election Night Guide
November 5, 2024
On this Election Day, as the nation awaits the results of its presidential election and various races for seats in Congress, remember that not all states may have final vote counts because of factors such as processing mail-in votes.

News

Pondering the Securitization of Community Development Financial Institution Loans 

November 5, 2024

Do Community Development Financial Institutions (CFDIs) Have a Role to Play in Meeting the Demand for Affordable Housing?

The bottom line: The growth of the securitization market in all its permutations – from commercial real estate to autos and credit cards, to home loans – is responsible for delivering heightened access to capital and increased debt liquidity.

On October 22, the Federal Reserve Bank of San Francisco hosted a meeting with CDFIs, other lenders, and securitization market participants to discuss the feasibility of CDFIs securitizing their loans. Securitizing these loans would allow for the recycling of capital in an effort to maximize funds available to CDFIs. CREFC’s Executive Director Lisa Pendergast attended the meeting.

The ultimate goal of this initial meeting was to determine the viability of a secondary market for CDFI loans.

What Are CDFIs? The U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) helps promote:

  • Access to capital and local economic growth in urban and rural low-income communities across the nation via monetary awards and the allocation of tax credits.

Financial institutions certified by the CDFI Fund are eligible to apply for monetary support and training to build organizational capacity. The CDFI Fund’s model is competitive and each of its programs provides CDFIs with the flexibility to determine the best use of limited federal resources in their community.

As per the New York Federal Reserve:

  • CDFIs are certified by a sub-agency of the U.S. Department of Treasury.
  • They are mission-driven financial institutions specializing in lending to low- and moderate-income communities.
  • Have access to sources of capital that are not available to other financial institutions. The main sources of CDFI capital include technical assistance grants and long-term capital at below-market rates. And yet, those sources of capital are limited.

By the numbers: As per the Federal Reserve Bank of New York, the CDFI industry has experienced significant growth, with industry assets tripling over the last five years to $452 billion.

  • There are currently 1,487 CDFIs (as of May 2023), representing a 40% increase since 2019.

CDFIs come in various forms, including:

  • Community Development Banks
  • Credit Unions
  • Loan Funds, and
  • Venture Capital Funds

Loan funds and credit unions comprise the largest share of CDFIs at a combined 85%.

CDFI Expansion through Securitization

What's next? While there are additional pathways to expanding CDFI capital beyond securitization:

  • Securitization has the potential for becoming a key avenue for capital expansion and recycling in the sector.
  • Yet, securitizing these loans could prove challenging given concerns over a lack of homogeneity in loan types, volume, data, and overall standardization across the various institutions involved.

While CDFIs originate many types of loans, multifamily affordable housing loans may prove to be the most attractive avenue in terms of asset classes given the growing need for housing. Notably, Bank of America is the largest private investor in CDFIs with more than $2 billion in loan deposits, capital grants, and equity investments across its over 250 CDFI partners.

Key CDFI Programs

CDFI programs provide monetary awards to FDIC-insured banks for increasing their investments in CDFIs and for expanding their lending, investment, and service activities in economically distressed communities.

The CDFI-Related Programs include:

  • Bank Enterprise Award Program. Provides monetary awards to FDIC-insured banks for increasing their investments in CDFIs and for expanding their lending, investment, and service activities in economically distressed communities.
  • CDFI Program. Financial Assistance (FA) and Technical Assistance (TA) Awards for certified and emerging CDFIs to support affordable financial services and products, including single-family mortgage lending, in distressed communities.
  • Technical Assistance Awards. Focused on start-up or existing CDFIs, these awards are used to build capacity to underwrite loans and provide other services to its target market through the acquisition of goods and services such as consulting services, technology purchases, and staff or board training.
  • Capital Magnet Fund. Competitive grant program to CDFIs and nonprofit housing developers to support financing tools, such as loan loss reserves or loan guarantees, to attract private capital for affordable housing and community and economic development associated with affordable housing.

Potential for Developing a Robust Secondary Market for CDFI Loans?

The sources of capital for CDFIs (as per a Federal Reserve Bank of Richmond survey) tend to be small and include:

  • Deposits,
  • Income earned from fees and interest on loans,
  • Government funding, and
  • Bank lenders seeking to meet their Community Reinvestment Act obligations

The ~$450 billion in CDFI assets represents just a fraction of the nearly $23 trillion held by all non-CDFI U.S. banks.

  • Limited access to capital sources is one reason why the industry is small relative to other lender types.

The ability to securitize CDFI loans would improve liquidity of CDFIs by affording them greater access to recycle capital and in turn the ability to originate more loans to low- and moderate-income communities.

CDFIs and Securitization

What we do know is that some CDFI loans are sold today in the secondary market — both on an individual or pooled basis.

  • According to Treasury, billions of dollars in single-family home loans originated by CDFIs are sold each year.
  • These loans, including loans backed by government programs, typically meet standards set by institutional investors and government sponsored enterprises, such as Fannie Mae and Freddie Mac.

To the good, there is some potential to securitize CDFI loans as they are generally granted on standardized terms and a robust dataset exists on loan underwriting and performance. The loans are also created at large enough volumes to attract investors either on a standalone basis or pooled.

Standardization and Detailed Data Gathering Imperative to Forward Movement

As in all securitization product, investors and credit rating agencies will demand and expect to receive a high level of pertinent data, allowing them to appropriately determine the level of risk they are assuming and possible returns. Specifically, investors must have the data available to understand the nature of the collateral, the structure of the loans, and historical loan performance across market/economic scenarios.

CREFC will continue to keep you updated on what potentially could be a novel and attractive market for institutional investors. Please reach out to CREFC’s Lisa Pendergast (LPendergast@crefc.org) if we wish to become involved in this effort. 

Contact 

Lisa Pendergast
Executive Director
646.884.7570

CDFI Image

The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Pondering the Securitization of Community Development Financial Institution Loans
November 5, 2024
Do Community Development Financial Institutions (CFDIs) Have a Role to Play in Meeting the Demand for Affordable Housing?

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