Fannie Mae has 'best year ever' in multifamily during 2007.

Officials at Fannie Mae said they are optimistic that the "fundamentals of multifamily remain solid" for 2008 even as the government-sponsored enterprise (GSE) declared 2007 its "best year ever" in multifamily financing.

Announced during MBA's 2008 Commercial Real Estate Finance (CREF)/Multifamily

Look for Fannie Mae to continue to bring all of the resources at its disposal to the multifamily space and build upon the success of 2007, Phil Weber, senior vice president of Fannie Mae's Multifamily Division, told reporters during a press briefing at MBA's CREF convention.

"By far this was Fannie Mae's biggest year yet, and we're very optimistic about the future," said Weber. "I think we're doing exactly what we were created to do."

Fannie Mae's multifamily financing solutions include debt financing through lender partners and investments in Low Income Housing Tax Credits (LIHTC) through syndication partners and multifamily bond purchases, while Fannie's Delegated Underwriting and Servicing (DUS[R]) lenders delivered $30.3 billion of the company's total investment in multifamily housing.

"I think it's fitting with the volatility in the marketplace that we're celebrating 20 years of our DUS program. DUS has been through a lot of cycles in the last 20 years," said Weber. "Our DUS lenders and other partners helped us achieve our biggest and best year ever in 2007. We expect to have another great year in 2008, as we do exactly what we were created to do--provide liquidity, stability and make housing more affordable."

In addition to the total multifamily investment, Fannie Mae committed $1.1 billion in equity investments that qualify for LIHTC.

Approximately 88 percent of the multifamily units financed by Fannie Mae in 2007 were affordable to families at or below the median income in their communities, while 51 percent of all multifamily units financed by Fannie served special affordable families (low- and very-low-income families in low-income areas), and 59 percent of all multifamily loans were made in underserved markets, according to the company.

Weber noted that the fundamentals for multifamily, including job growth and demographics, remain positive, while immigration growth is adding millions of new households each year.

"We're not immune to the single-family correction, but the metrics for the multifamily business remain solid," said Weber.

In addition to affordability, Fannie Mae focused on addressing the renovation needs of the nation's aging multifamily affordable-housing stock in 2007 by making available the Community Investments Mezzanine-Moderate Rehabilitation (CI Mezz-Mod Rehab) product.

CI Mezz-Mod Rehab provides a one-stop financing solution for multifamily properties with moderate to substantial rehabilitation needs, by combining a permanent DUS loan with a mezzanine loan. Fannie Mae financed $180 million in mezzanine loans in 2007, which enabled it to invest an additional $1.7 billion in DUS permanent loans, explained Weber.

Expect to see a "significant pickup" in Fannie's CI Mezz-Mod Rehab product in 2008, as there are a lot of multifamily properties from the 1970s and 1980s in need of updating, said Weber.

Look for Fannie Mae to continue to push focus on its CI Mezz-Mod Rehab product.