By Tom SheanThe Virginian-Pilot© March 22, 2011
NORFOLKPlans to restructure Fannie Mae and Freddie Mac have sent shivers through the nation's home-building and home-finance industries.Owners and developers of apartment complexes also will feel the impact of any overhaul of the two government-owned lenders, a veteran mortgage banker said Monday.After playing a significant role in financing multifamily projects for decades, Fannie and Freddie will be shrinking, said John B. Levy, a Richmond-based mortgage banker for commercial and multifamily real estate.During the financial crisis three years ago, Fannie and Freddie accounted for 70 to 80 percent of the financing for multifamily housing, he said during a luncheon gathering of real estate developers and lawyers at the Norfolk law firm Willcox & Savage.
The two congressionally chartered companies were hobbled by troubled home loans and seized by the Treasury Department in 2008. The bailout provoked demands from some politicians to scale back the roles Fannie and Freddie play in purchasing and guaranteeing mortgage loans.His firm - John B. Levy & Co. - recently lined up funding for two apartment-complex transactions in Hampton Roads from life insurance companies rather than from Fannie or Freddie, said Levy, its president. The two mortgage finance companies, he said, will continue to be key sources of funds for low-income housing.
The environment for financing commercial real estate, Levy said, has changed dramatically from near-paralysis three years ago. "Is there new money available? Absolutely."Life insurers, pension funds, large banks and the commercial mortgage-backed securities market have re-emerged, he told about two-dozen listeners. In addition, some lenders have become more willing to renegotiate the terms of existing commercial real estate loans. Borrowers, however, must be prepared to sacrifice something, Levy cautioned."You've got to put in something: It could be cash, additional collateral, or it could be a personal guarantee," he said.While the nation's largest banks have returned to commercial real estate finance, community banks are still wrestling with heavy concentrations of commercial real estate loans on their books and have less of an appetite for new loans, Levy said.
