It’s a new year and change is in the air. With financial regulation changes sure to come and the recently announced Federal interest rate increases, it’s no wonder mortgage banking and real estate lending is hot on investors’ minds.
Listeners will remember Livingston from episode 70, in which he gave us a recap on multifamily mortgage banking and real estate lending from the 2016 conference. Livingston is Vice President of Walker & Dunlop‘s Tampa office. Livingston brings over 12 years of experience in real estate lending and finance solutions to Walker & Dunlop, which just celebrated it’s 80th anniversary.
Livingston offers up a recap of the 2017 CREF/Multifamily MBA Conference and discusses key themes from the past year and the current state of mortgage banking and real estate lending.
What’s In Store for Mortgage Banking and Lending
Agency Annual Caps
Fannie Mae & Freddie Mac each allocated $36.5 billion for 2017 (same as 2016)
Certain loans and portions of loans are excluded from the cap (i.e. affordable and green/energy efficient)
Fannie Mae & Freddie Mac multifamily production totaled over $110 billion in 2016.
Fannie up 30%, Freddie up 20% from 2015
Expected to capture 40% of total multifamily volume for 2017 ($50-55 billion each)
Risk-retention regulations put in place in 2016, narrowing amount of CMBS lenders
Post-election stability, but more selective lending market
CMBS lenders ramping up bridge-lending
Life-insurance (50% leverage and under): 125-135 range
CMBS (75% leverage): 250-280 range
Agency (80% leverage): Low 200s range
Federal interest rate sees .25% increase
Expected to increase to 2.75-3% by end of year
Publix most active retail buyer in FL
Grocery chains are buying out plazas after lease terms or taking right of first refusal on new lease terms
Reduced supply of grocery-anchored retail
Strong retail appetite for real estate lenders
In addition to his V.P. role at Walker & Dunlop, Livingston is President of the Society of Real Estate Professionals (SOREP). Formerly the Tampa chapter of University of Florida’s Bergstrom Council, SOREP hosts networking events and seminars to professionals and gives back to Florida universities. SOREP focuses on all aspects of the real estate industry and is open to all. Click here for more info.
Walker & Dunlop offers comprehensive real estate financial solutions for all income-producing properties. For more info, visit Walker & Dunlop website.
The coming year is looking to be an eventful period for mortgages and financial lending in real estate. Debt markets are poised to undergo significant changes over the following years amidst regulatory changes and geo-political headwinds. Investors, both seasoned and novice, should be aware of the changes and the effects they could have on current and future mortgages.
Livingston Hessam, Vice President of financial solutions firm Walker & Dunlop and financing expert, discusses these changes in the debt markets and what investors need to know about their impacts on mortgages and other debt-equity options.
2016 Mortgage Bankers Association Conference
Annual conference gauges financing market for coming year
Since the Dodd-Frank Act was signed into law in 2010, the immense and labyrinthine series of stringent financial regulations has been a foreboding presence in real estate lending, especially in Florida. Instituted in response to the Great Recession, Dodd-Frank has posed a formidable threat to investors. With over 2000 pages of new rules and financial regulations, investors are unsure exactly what is exempt from Dodd-Frank stipulations.
Kevin Jursinski, B.C.S is FL Bar Board certified in real estate and construction law as well as business litigation. With over over 30 years of practice in Florida real estate law as well as personal experience in the Florida investment market, Kevin has the knowledge and insight to summarize the bill and define its role in real estate lending. Kevin also discusses how Dodd-Frank related litigation might be approached in court.
Dodd-Frank Act (2010)
Dense and punitive set of rules outlining financial regulation
Seller-Financing & 3rd Party-Financing Affected
Gray Areas Explained
Dodd-Frank does not apply to non-consumers (Investors) of residential property
Commercial properties do not apply
Dodd-Frank only affects primary residences (vacation homes exempt)
Purchase-money financing only affected by Dodd-Frank in owner-occupied sales
Residential home-builders are precluded under Dodd-Frank from becoming contractors of seller finanacing
Dodd-Frank does not apply retroactively – previous owner-occupied financing not affected
Dodd-Frank applies to origination of loan intent
Recent Dodd-Frank Changes
Owner-occupied residence lending/financing
1-Sale exceptions – Sell one property per year w/ Dodd-Frank guidelines
3-Sale exceptions – Sell up to three properties per year w/ Dodd-Frank guidelines