WASHINGTON, DC- Federal Housing Finance Agency Acting Director Edward J. DeMarco couldn't have been more specific about his plans for the GSEs' multifamily finance operations: there will be a 10% reduction target in business volume from 2012 levels—achieved through some combination of increased pricing, more limited product offerings, and tighter overall underwriting standards.

This is the first tangible sign that, after years of rumblings, the government means business with its plans to scale back the GSEs. For the multifamily space, this is no small consideration. GSE support has, in part, kept the sector robust even during the recession. With a 10% haircut in financial support, how will the sector fare?

The conventional wisdom is that it will be a blow or at least a setback for deals. Certainly a pullback is a reason for concern, says Steve Edwards, partner at Manatt, Phelps & Phillips in the Real Estate & Land Use practice group. " As the capitalization rates for multifamily properties continue to fall, one reason that the market has remained viable is the relative availability of low interest financing from Fannie Mae and Freddie Mac," he tells GlobeSt.com. "It can be expected that any curtailment in the availability of such financing will not have a positive market impact."