Notes from Michael McRoberts, VP of Multifamily Production & Sales, Freddie Mac conference call

The national apartment market has moved off its bottom, and apartment occupancy and rent fundamentals are in a perfect storm upward thanks to the single family predicament, pent up demand and the low apartment building starts during the great recession. 


Freddie Mac would like to expand Student Housing Lending and Senior Housing perm. loan production due to great results with the portfolio.


The percentage of apartment purchase loans to refinance loans has increased to one third from twenty five percent 2010. Total Multifamily perm. volume expected to rise this year. Freddie Mac off to slow start but expect big finish based on lender pipelines, hoping to exceed its $16 Billion multifamily goal for 2011.  Insurance companies are back expected to loan $10 billion but due to higher volume of loans not cut into agency volume, FHA and Fannie Mae also   holding 2010 market share.


Surprisingly 1 in 7 new Freddie Mac loans is a Capped Arm with interest rates in 4 +% range and interest rate caps at 6.25%, but very flexible prepayment terms.


Overall apartment occupancy and net incomes are up, apartment loan production should exceed 2010. Most loans are being sold using the capital markets/MBS style transactions which pool the loans then slice the cash flow priorities on the loan pools and sell the pooled slices of cash flow in three or more pools as senior / B Bonds / and mezz debt. This process currently produces the best rates.