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Fannie Mae multifamily MBS issuance rises 25% in 2Q

Fannie Mae multifamily mortgage-backed securities issuance grew 25% from year-ago levels in the second quarter, according to data released by the government-sponsored enterprise Friday.

The firm's MBS issuance rose to $6.7 billion from $5.34 billion in 2Q of 2011. That increase is attributed to low interest rates and growing interest in the multifamily segment overall.

"I think one of the primary drivers is something well outside of our control," said Kimberly Johnson, vice president of Fannie's multifamily capital markets. "Interest rates are continuing to fall, and while that is just part of our monetary policy right now, it is working."

The GSE also used its Fannie Mae Guaranteed Multifamily Structures, known as Fannie Mae GeMS, to re-securitize $1.2 billion of DUS MBS securities in the second quarter. The GeMS program is made up of structured multifamily securities backed by collateral from Fannie Mae's capital markets segment.

The firm's capital markets segment also sold $1.6 billion of multifamily mortgage securities from its own portfolio in the second quarter.

Johnson says borrowers are coming in to refinance and discovering great long-term rates, which is spurring growth in the segment. The advantage, she says, is borrowers are able to lock into 10-year rates close to 4%.

John Jay, a senior analyst at Aite Group, said the multifamily segment from an investor's standpoint is easier to leverage.

"If you compare the situation where there is a large institutional investor looking to buy separate single-family houses versus one housing complex that has 100 units, it is much easier to update that one structure," Jay said.

Jay believes an uptick in multifamily MBS issuance is also reflective of today's changing marketplace.

"I think that part of this might be a reflection of ownership behavior, so folks now are more willing to rent and possibly defer the American Dream because they had these recent experiences in 2008 and 2009," Jay asserted.

kpanchuk@housingwire.com

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