Earlier this year, Michael May had a revelation. The senior vice president of multifamily sourcing at Freddie Mac started to suspect that lending for multifamily real estate might be shifting. The realization came when he saw the so-called “lost-deal report”—an internal report that, as the name suggests, lists deals that the agency lost. His hunch was confirmed later in the spring when he received a second report and saw that the agency had lost five deals, the majority of them to life insurance companies.

Naturally, Freddie doesn’t win every transaction it goes after, May says. Fannie Mae, for example, makes a regular appearance on the lost-deal report as the winning bidder. But up until recently, the losses to private-sector lenders such as life insurance companies have been few and far between. GSEs have been virtually “the only game in town for the past year-and-a-half,” May says. “Together with Fannie Mae, we financed 85% of the total market, with FHA providing the rest.”

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