serious talks within theAdministration took an already jittery commercial real estateindustry by surprise. With Fannie Mae and Freddie Mac providingjust about all of the liquidity to the multifamily industry, anychange is bound to be viewed with alarm.

It is too early for the industry to draw conclusions however,David Cardwell, vice president of capital markets and technology ofthe National Multifamily Housing Council, tells "Thereports in the media are still very general--and they are onlytalking of residential defaults." He says he has not been in touchwith the GSEs about the news.

The reports focus on the creation of a bad bank, which wouldabsorb the non-performing assets on the GSEs' balance sheets. Evenif multifamily is part of this scenario, the number of these loansin default or troubled are so small that it should not affectlending capacity, Cardwell says. "Within the last 90 days, realestate owned multifamily as a result of foreclosure are less than ahandful out of a book of business that exceeds a couple of hundredbillion dollars."

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Erika Morphy

Erika Morphy has been writing about commercial real estate at for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.