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Fannie Mae and Freddie Mac arehaving a slow third quarter. When the two agencies hit theirlending caps a few weeks ago, there was some uncertainty aboutextending them. As a result, Fannie and Freddie have pulled back onboth pricing and credit terms over the last 6 weeks, creating anopportunity for CMBS players to gain multifamily marketshare.

"The federal government puts out allocation every year withFannie and Freddie, and once they hit that cap, they go into bunkermode and only do deals that fit their mandates, which are typicallyaffordable deals," Jonathan Lee, principal andmanaging director at George Smith Partners, tellsGlobeSt.com. "So, in order to save their allocation for the year,they are being a lot more conservative on the deals that they do.That is driving a lot of business to CMBS right now."

It isn't unusual for the agencies to hit their initial lendingcaps in the third quarter. Generally, this causes some uncertaintyuntil the agencies announce an extension. This year, however, someinvestors feared there wouldn't be an extension. "This uncertaintyusually comes around this time of the year," says Lee. "The TrumpAdministration is trying to diversify the lenders in the space andtake off less from the government, so there were rumors that theywouldn't extend the caps. That caused additional uncertainty andsome market congestion."