CREF Highlights

Thomas Kim tkim@mba.org

November 15, 2018


Commercial and multifamily developments and activities from MBA relevant to your business and our industry.

Proposition 10 Defeated in California
On Election Day, Proposition 10 was defeated on the ballot in California. The measure would have repealed state law that currently restricts the scope of rent-control policies that cities and other local jurisdictions may impose on rental (multifamily and single-family rental) properties.

MBA has fought hard to defeat Prop 10, including partnering with the California Mortgage Bankers Association and other coalition partners, and activating our Mortgage Action Alliance grassroots network.

For more information, contact Sharon Walker at swalker@mba.org.

FHFA Announces 2019 Multifamily Lending Cap

Last Tuesday, FHFA announced the multifamily lending caps and changes in exclusions for 2019. The 2019 production cap will remain at $35 billion for each GSE. Existing exclusions will remain in place, but will be amended as follows:

  • Loans to finance energy or water efficiency improvements: FHFA is increasing the requirements for exclusion from the multifamily cap loans that finance energy or water efficiency improvements through Fannie Mae's Green Rewards and Freddie Mac's Green Up/Green Up Plus programs. To qualify for exclusion from the cap, multifamily loans that finance energy or water efficiency improvements must project a minimum 30 percent reduction in whole property energy and water consumption and a minimum of 15 percent of the reduction must be in energy consumption (For 2018, financed energy or water efficiency improvements must project a minimum 25 percent reduction in either annual energy or water whole property consumption to qualify). FHFA is also adding a data-collection requirement for all excluded Green Rewards and Green Up/Green Up Plus loans, which requires engagement of a third-party data-collection firm prior to closing.  
  • Loans on affordable units in cost-burdened renter markets: FHFA has developed a new data-driven approach to designate markets in which units affordable to cost-burdened renters at certain area median income levels will be excluded from the multifamily cap on a pro-rata basis. The announcement does not provide details on that approach or its expected impact.  FHFA will provide further details in FHFA's 2019 scorecard.

For more information, contact Sharon Walker at swalker@mba.org.

FHFA Adds Supplementary Tables to its Proposed Enterprise Capital Rule
Last Tuesday FHFA responded to MBA and industry requests for additional information regarding FHFA's proposed regulatory capital framework for the GSEs. It released multifamily supplementary tables showing separate Fannie Mae and Freddie Mac estimated risk-based capital requirements for multifamily whole loans, guarantees, and related securities as of Sept. 30, 2017.

FHFA did not extend the comment period, which ends Nov. 16, 2018. MBA is working to finalize our comments, which will include requests for further additional information and for additional rounds of notice and comment to consider such additional information.

For more information, contact Sharon Walker at swalker@mba.org.

MBA Hosts Inaugural Debt Fund Roundtable
MBA hosted a Debt Fund Roundtable event in New York City last week. This gathering convened a small peer group of senior executives who lead commercial real estate debt platforms for many of the largest private equity firms in the country.

Jeff Friedman, Principal and Co-Founder of Mesa West Capital and a member of MBA's Commercial/Multifamily Board of Governors, hosted the event. Jack Cohen, Managing Partner of member firm 3650 REIT moderated an engaging discussion on commercial real estate lending.

For more information about MBA's various debt fund initiatives, contact Andrew Foster afoster@mba.org

MBANow: CREF Corner Office Conversation with DBRS's Erin Stafford
MBA released a new interview with DBRS Managing Director Erin Stafford, who discusses commercial mortgage-backed securities, the role of rating agencies, and the credit outlook for commercial real estate. Stafford is a member of MBA's Commercial/Multifamily Board of Governors (COMBOG) and leads DBRS's CMBS ratings business.

For more information, contact Andrew Foster afoster@mba.org.

MBA's 2018 Summit on Diversity and Inclusion
Join MBA at the 2018 Summit on Diversity and Inclusion Nov. 27-28 in Washington, D.C. Designed for the residential and commercial multifamily real estate finance industry, the summit will provide valuable insights into implementing an inclusive workplace culture, ways to improve financial profitability, and tips for growing your access to a wider demographic market. Hear industry experts lead discussions on relevant challenges and strategies related to diversity and inclusion.

To register, click here. For more information, contact Krystal Thomas at kthomas@mba.org.

mPact Fall Fundraising Events
Thank you to everyone who supported mPact's Fall Fundraising campaign for ODF! These events generated more than $18,000 for families in need across the country. The mPact Advisory Committee especially thanks the city leads for their time and effort in making this campaign such a success.

To learn more about mPact, follow us on LinkedIn or contact Rita Kelly at rkelly@mba.org.

MBA Education's CRE Basics: Underwriting Multifamily & Valuation Course
Kicking off on Nov. 27, this four-session course is designed to introduce students to the multifamily lending process, focusing on the underwriting component. Beginning with an exploration of the capital sources available for multifamily financing, the course moves through cash flow analysis, how rents and expenses are derived, and the valuation process.

Participants also will learn how underwriters determine whether a particular property is acceptable collateral to secure a prospective mortgage. In addition, the course will review common multifamily lending risks and risk mitigants. To register for the course, click here.

For more information, contact Gail Griffith at ggriffith@mba.org.

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