GSE’s dominate multifamily CMBS market


Trepp, a provider of data, analytics, and technology solutions to the global securities and investment management industries, recently issued a report on the issuance of multifamily commercial mortgage backed securities (CMBS). It showed that while private entities supplied the larger part of the multifamily mortgage market before the financial crisis in 2008, government sponsored entities (GSE’s), Fannie Mae and Freddie Mac, have come to dominate the market since then.

A picture is worth a thousand words

The sea change which has taken place in the multifamily CMBS market since the recent financial crisis is apparent from the following graph, which is taken from the Trepp report:

Source: Trepp

The chart shows that, prior to the crisis, the great majority of multifamily CBMS issuance came from the private-label market. Once the crisis hit, the private-label market dried up with essentially no private CMBS issuance taking place in 2009. At that point, agencies and GSE’s stepped in. Since then, their multifamily CMBS issuance has grown rapidly. It is now not only many times larger than private CMBS issuance, but also many times larger than agency and GSE CMBS issuance before the financial crisis.

Trepp’s research also showed that, in many cases, properties which had been financed through private-label CMBS’s have had their financing converted to agency and GSE issued loans.

Note that GSE’s and CMBS’s are not the only sources of mortgages on multifamily properties. Banks and thrifts, state and local governments, life insurance companies and others are also active in providing loans to this market. Those providers are not examined in the report.

The Trepp report also lists certain specific properties whose financing was migrated from private-label CMBS to agency and GSE loans. The full report can be viewed here.