In an effort to become more competitively involved in the small balance loan market and to further support affordable housing, Freddie Mac on October 9, 2014 launched a Small Balance Loan Platform (“SBL”) to purchase and securitize small multifamily loans. In order to maintain a level of quality in securitization, the originating seller/servicer will be obligated to purchase the B-pieces secured by their underlying loan, which in turn can be sold to other investors. As of this posting, they have a growing pipeline of deals between $90-$100 million. While most are in the early stages of quoting loans, many deals are under application and in the underwriting phase. Freddie Mac states that the program is designed to “increase liquidity in the small balance space and provide stability in this somewhat under-served market.” Small loans are estimated to comprise almost 30% of the multifamily market. Freddie’s entrance into this space mirrors the increased focus on small balance loans in Fannie Mae‘s 2.0 guidelines that are to go live by the end of the year.
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The hospitality sector is enjoying renewed interest from investors, with more deals in the pipeline, increased refinancings, and improved transaction volume. While the industry still faces challenges, optimism prevails for modest growth over the next year.
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