WASHINGTON, DC- Federal Housing Finance AgencyActing Director Edward J. DeMarco couldn't have been more specific about his plans forthe GSEs' multifamily finance operations: there will be a 10%reduction target in business volume from 2012 levels—achievedthrough some combination of increased pricing, more limited productofferings, 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 theGSEs. For the multifamily space, this is no small consideration.GSE support has, in part, kept the sector robust even during therecession. With a 10% haircut in financial support, how will thesector fare?

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