The increased focus on apartments is part of Fannie's Keys toRecovery initiative, which has so far been serving single-familyhomeownership. "With the turmoil being what it was, we decided as acompany that we would want to do things that are positive steps intrying to help the market recover," said Jeff Hayward, Fannie's SVPof community lending and development, in a conference callannouncing the initiative. "Our decision was whether to sit backand watch it, or try to do things to help the market moveforward."

As the largest multifamily investor, Fannie's new focus on thesegment will be concentrated in four key areas: small loans up to$3 million, or $5 million in high-cost markets; seniors housing;military housing; and increasing investment in the affordablesegment, particularly bond credit enhancement. While those arenear-term goals--specifically, for the second half and into2009--the firm is committed to the apartment sector, says PhilWeber, SVP of multifamily. "Our overall view of the multifamilybusiness is that the fundamentals remain solid," he relates. "The$20 billion we invested in the first half of the year is, for themost part, in increase across the board in almost all of ourbusiness, especially the DUS and small loan business."

By midyear 2007, Fannie's overall multifamily investment was$27.2 billion, consisting of both debt and CMBS purchases. Thefirm's executives attribute the decrease to the fall of the CMBSmarket. "Overall, from a debt perspective, our volumes are upyear-over-year," noted Manny Menendez, VP of multifamily productdevelopment and business management. "The market is smaller than itwas at this time last year and there's less activity than the firstsix months of last year."