Interest only loans at low leverage, such as this refinancing, are not uncommon, David Cardwell, an analyst with the National Multifamily Housing Council, tells GlobeSt.com. "This is a relatively safe loan and Rreef is a high quality borrower."
Indeed, Fannie Mae and Freddie Mac are doing nothing but 'safe loans' now, even in the relatively stable multifamily space. In fact their definition of safe loans is continually being refined as the economy and their own portfolios continue to struggle. For example, "their 'Watch List' [is] growing but that is as much because they are mindful of the growing number of issues that would place a loan on the 'Watch List'," Cardwell says. "This might include market deterioration or other external factors to a property--a loan that is in a market with stronger than normal unemployment may be placed on a 'Watch List' even if it is performing well."
Despite the growing numbers of distressed properties in their portfolios, Cardwell says Fannie Mae and Freddie Mac's portfolios are holding up relatively well, considering, with only a handful of properties in REO status. "They have said they are expecting deterioration but they don't know how that will impact loan by loan distress."
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