Multi-Family Financing Options

[Bobby Larsen]

FYI Because I think this will have a larger impact on pricing than the shelter-in-place orders. Not only have interest rates crept up but overall terms like reserves/escrows and debt service coverage have increased but now I hear that due to changes in Freddie terms with originators, most SBL originators are ending the program until further notice.

Assuming there are still buyers out there in the $2mm and up Multi-Family space, what are you using or assuming for financing? On the smaller side, I'm sure there will still be select regional/local credit union options but for larger multi-state buyers this will no doubt have an impact.

[Eric Johnson]

Hi @Bobby Larsen, you make great points. I actually specialize in commercial/multifamily finance, so I'm around this stuff everyday. The past couple weeks have been absolutely hectic. You are correct that guidelines are constricting and requirements are going up. I have rates in the range of 4-4.50% for 1m+ fannie freddie products right now that are being offered. 5% LTV cuts are common.

For small balance lending (1m and below) there is the same effect, with some lenders closing out current pipelines, but halting originations all together. Without liquidity restored to the market, it's very hard to get the money flowing to the proper channels, so that other direct lenders can make the type of loans we were seeing pre-pandemic. 

We can only hope for a good resurgence, but Freddie/Fannie options are still some of the best on the market. Hope this helps.