WASHINGTON, DC - Government sponsored lender Fannie Mae said Wednesday it is increasing its investment in the multifamily home market in an effort to boost liquidity and expand rental housing opportunities. Fannie is increasing its commitment to buy small multifamily loans of up to $3 million, or $5 million in some markets, in an effort to meet increasing demand for rental housing.
Fannie said it invested $20 billion in multifamily housing in the first half of 2008, $5 billion of which was invested in small loans. These loans typically finance affordable housing properties located in urban areas. The company also provided more than $1 billion in financing for seniors housing in the first half, and has increased its staff to help serve more borrowers.
Additionally, Fannie said it will buy up to $1 billion in military housing bonds. Proceeds from the sale of these bonds are used to renovate existing on-base housing and build new units. The company invested $773 million in military housing bonds in 2007. During the first five months of this year, no new military housing transactions were priced, Fannie said.
Fannie and fellow government-sponsored enterprise Freddie Mac are the nation's largest purchasers of mortgages. Securitizations, the sale of bonds backed by pools of loans, are one of Fannie and Freddie's primary sources of generating new revenue.
Both companies have been struggling since the middle of 2007 with rising defaults among mortgages and continued deterioration in the housing market as fewer homes are being sold and prices fall.
Fannie shares lost 58 cents, or 3.3 percent, to $17.04 in midday trading. Shares are down about 9 percent this week, after a Federal Reserve official warned that housing market problems would likely extend into next year and an analyst said accounting changes could leave both Fannie and Freddie short of necessary capital reserves.
Source: PRnewsWire.com