Freddie Mac and HUD Multifamily Loans

Freddie Mac and HUD occupy the patient end of multifamily finance. Freddie Mac's Optigo network, and its Small Balance Loan program in particular, delivers competitively priced non-recourse debt on smaller apartment properties with a streamlined process and less onerous reserve requirements than borrowers often expect. Larger Optigo conventional executions compete directly with Fannie Mae, and the two agencies trade advantage depending on market, asset and week.

HUD-insured lending through FHA programs is a different animal entirely. Section 223(f) refinances or acquires existing apartments with amortization up to thirty-five years; Section 221(d)(4) finances new construction and substantial rehabilitation with a construction period followed by up to forty years of fully amortizing fixed-rate debt, all non-recourse. Nothing else in commercial real estate matches that. The offset is process: Davis-Bacon prevailing wage requirements on construction deals, mandatory inspections and cost certification, extensive third-party reports, mortgage insurance premiums and an application queue that can run the better part of a year. HUD is the right answer when the sponsor intends to own the asset for decades and can afford to wait.