Agencies: Green Programs Are a “Homerun”

LOS ANGELES—“Going green gets you more green,” quipped moderator Andrew Behrens, vice chairman at CBRE, at RealShare Apartments about the green loan programs at both Fannie Mae and Freddie Mac. Scott Croul, managing director of production and sales at Freddie Mac, and Phyllis Klein, VP at Fannie Mae, spoke on the Multifamily Giants: The Latest from Fannie and Freddie panel at the annual multifamily conference, and highlighted their green loan programs, with Croul calling theirs a “homerun.”

Both green lending programs offer a discount for “efficiencies made through renovations.” Freddie Mac underwrites some of the savings, but the discount is the major benefit to the borrower, according to Croul. “A lot of borrowers are using the green program to get better pricing and certainty of execution,” he said. Fannie also has a tremendous focus on green, and although their green program isn't exempt from the caps, it also offers a discount—a pricing differential up to 45 basis points. “We are trying to create a marketplace for green MBS,” said Klein.

Klein also said that it can be easy to qualify for green products because often times owners are doing these renovations anyway. “Owners are almost already qualified,: she said.

Green lending aside, both agencies remain extremely bullish on multifamily, and expect to have record-breaking volumes again this year. Last month alone, Fannie had a $7 billion month, and both expect to be north of $50 billion by the end of the year, a 10% to 15% increase over last year. The floating rate loan product is a huge portion of this increase in volume, and it is driven mainly from acquisitions.

Even more interesting, the agencies aren't limiting to specific product classes or markets. According to Croul, Freddie is supporting all multifamily product in all locations, “class-A down.” “We are focused on market attributes, not location,” he said. They see a lot of lease-up deals in gateway markets as well as secondary markets, and they tend not to be worried about supply because there has been such a shortage, and demand is still there. “It is just a matter of absorption schedule,” he added.

RealShare Apartments covered all multifamily topics over two days, kicking off with a technology segment.

LOS ANGELES—“Going green gets you more green,” quipped moderator Andrew Behrens, vice chairman at CBRE, at RealShare Apartments about the green loan programs at both Fannie Mae and Freddie Mac. Scott Croul, managing director of production and sales at Freddie Mac, and Phyllis Klein, VP at Fannie Mae, spoke on the Multifamily Giants: The Latest from Fannie and Freddie panel at the annual multifamily conference, and highlighted their green loan programs, with Croul calling theirs a “homerun.”

Both green lending programs offer a discount for “efficiencies made through renovations.” Freddie Mac underwrites some of the savings, but the discount is the major benefit to the borrower, according to Croul. “A lot of borrowers are using the green program to get better pricing and certainty of execution,” he said. Fannie also has a tremendous focus on green, and although their green program isn't exempt from the caps, it also offers a discount—a pricing differential up to 45 basis points. “We are trying to create a marketplace for green MBS,” said Klein.

Klein also said that it can be easy to qualify for green products because often times owners are doing these renovations anyway. “Owners are almost already qualified,: she said.

Green lending aside, both agencies remain extremely bullish on multifamily, and expect to have record-breaking volumes again this year. Last month alone, Fannie had a $7 billion month, and both expect to be north of $50 billion by the end of the year, a 10% to 15% increase over last year. The floating rate loan product is a huge portion of this increase in volume, and it is driven mainly from acquisitions.

Even more interesting, the agencies aren't limiting to specific product classes or markets. According to Croul, Freddie is supporting all multifamily product in all locations, “class-A down.” “We are focused on market attributes, not location,” he said. They see a lot of lease-up deals in gateway markets as well as secondary markets, and they tend not to be worried about supply because there has been such a shortage, and demand is still there. “It is just a matter of absorption schedule,” he added.

RealShare Apartments covered all multifamily topics over two days, kicking off with a technology segment.