Secondary Market For Multifamily Financing Continues To Develop.Financing for apartment property acquisitions and development has been relatively freely available during the past several years. A healthy apartment market in a strong economy has provided the basis for greater access to acquisition and development financing. Multifamily mortgage debt outstanding totaled $411.1 billion at the end of least year. The levels increased at a 7.5 percent compounded annual growth rate since 1994 the point at which the apartment market bottomed out from its long, deep recession. Total multifamily mortgage debt last year rose even faster with a 10 percent increase. Data used for this article comes from the Federal Reserve Board's Flow of Funds Flow of funds In the context of municipal bonds, refers to the statement displaying the priorities by which municipal revenue will be applied to the debt. In the context of mutual funds, refers to the movement of money into or out of a mutual funds or between or among series. This series covers financial assets Financial assets Claims on real assets. and liabilities. Distribution of the holders of multifamily mortgage debt has been changing during this period of growth. Commercial banks are now the leading holder of multifamily mortgages and continue to increase their market share. The fastest growing sectors are those related to the secondary market and securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. of mortgages. Combining them would produce the largest holding of mortgage debt with a total of $142.9 billion at the end of last year. Commercial banks held a 19 percent share ($77.7 billion) of total multifamily mortgage debt at the end of last year. Their share was 13 percent in 1991 and 11 percent in 1985. Commercial banks are also still the largest source of construction financing of all types, including multifamily projects. Currently, there is no source of construction financing data. HUD Hud (h  d), a pre-Qur'anic prophet of Islam. Hud unsuccessfully exhorted his South Arabian people, the Ad, to worship the One God. had a data series that gave estimates of loan
originations The examples and perspective in this article or section may not represent a worldwide view of the subject.Please [ improve this article] or discuss the issue on the talk page. for construction and permanent financing Permanent financing Long-term financing using either debt or equity. permanent financing The long-term financing that supports a long-term asset. by type of property and holder, but discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: it after 1997 (due to budget cuts and difficulty in collecting the data). An increased lending activity was one of the contributors to the move of commercial banks into the leading individual category of holders of multifamily mortgage debt. A sharp decline in savings institutions' share of the multifamily mortgage market is also a factor. Savings institutions held 44 percent of multifamily mortgages in 1985. Last year their share dropped to 15 percent. Savings institutions were still the third largest holder of multifamily mortgage debt last year. They held a total of $61.3 billion versus a total of $79.9 billion in 1991, when their share was 28 percent. Savings institutions reduced their holdings of multifamily mortgages largely in response to the problems they encountered with bad loans in the 1980s and a stricter regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environment. Savings institutions also have turned to the secondary mortgage markets to reduce risk in their portfolios. The secondary market for multifamily mortgages is still relatively in its infancy infancy, stage of human development lasting from birth to approximately two years of age. The hallmarks of infancy are physical growth, motor development, vocal development, and cognitive and social development. . It is also a complex market in terms of isolating i·so·late tr.v. i·so·lat·ed, i·so·lat·ing, i·so·lates 1. To set apart or cut off from others. 2. To place in quarantine. 3. the level of activity. Much of the secondary market and securitization of mortgages had evolved from government agencies and government-sponsored enterprises. The government agencies include the Government National Mortgage Association (GNMA GNMA abbr. Government National Mortgage Association ) and Farmers Home Administration. Government-sponsored enterprises involved in multifamily mortgages include Fannie Mae Fannie Mae: see Federal National Mortgage Association. and the Federal Home Loan Mortgage Corporation Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, privately owned, government-sponsored organization that uses private capital to buy home mortgages as a means to help lower housing costs. (Freddie Mac Freddie Mac: see Federal Home Loan Mortgage Corporation. ). Data for the secondary markets in the Flow of Funds mortgage sector data includes federally related mortgage pools, asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. and government-sponsored enterprises. Federally related mortgage pools holdings include multifamily mortgages held by GNMA, FNMA FNMA abbr. Federal National Mortgage Association Noun 1. FNMA - a federally chartered corporation that purchases mortgages Fannie Mae, Federal National Mortgage Association , FHLMC See Federal Home Loan Mortgage Corporation. and Farmers Home Administration that are financed in the capital markets. The financing occurs in multiple forms. One example is mortgages that are purchased with funds obtained by selling investors general debt securities; they are not backed by mortgages. Federally related mortgage pools rose to the second position in holders of multifamily mortgages. The holdings of multifamily mortgage in these pools totaled $66 billion last year. They have grown substantially from a $22.4 billion level in 1994.
MULTIFAMILY MORTGAGE DEBT (billions of dollars)
Amount Outstanding at End
of Year
1991 1992 1993
Total Assets 281.7 269.3 266.2
Commercial banking 35.1 36.2 37.0
Savings institutions 79.9 698.0 67.4
Federally related mortgage pools 26.1 23.8 22.5
State and local governments 41.7 424.0 42.8
ABS issuers (Asset Backed Securities) 3.2 66.0 8.4
Life insurance companies 29.3 272.0 27.5
Government sponsored enterprises 14.2 15.8 17.5
Federal government 31.9 27.6 246.0
Nonfarm noncorporate business 8.4 8.4 7.0
State and local govt. retirement funds 4.8 4.2 4.1
Mortgage companies 2.7 3.0 3.1
Finance companies 0.0 0.0 0.0
Nonfinancial corporate business 6.0 0.4 0.5
REITs 2.2 2.2 1.9
Private pension funds 0.9 0.7 0.7
Household sector 0.8 1.1 1.4
Total liabilities 281.7 269.3 266.2
Nonfinancial corporate business 18.8 19.3 19.9
Nonfarm noncorporate business 261.3 248.2 243.4
REITs 1.6 1.8 3.0
Amount Outstanding at End
of Year
1994 1995 1996
Total Assets 265.8 273.4 289.2
Commercial banking 37.9 42.5 45.5
Savings institutions 64.3 62.0 61.6
Federally related mortgage pools 22.4 26.9 32.5
State and local governments 43.5 44.1 459.0
ABS issuers (Asset Backed Securities) 99.0 12.0 16.1
Life insurance companies 27.8 28.7 30.8
Government sponsored enterprises 18.4 19.0 18.6
Federal government 22.0 17.3 14.8
Nonfarm noncorporate business 7.0 7.9 7.0
State and local govt. retirement funds 4.3 4.5 4.7
Mortgage companies 3.1 4.2 4.1
Finance companies 0.0 0.0 3.1
Nonfinancial corporate business 0.9 0.1 0.8
REITs 2.1 1.6 1.2
Private pension funds 0.9 1.0 1.0
Household sector 1.3 1.6 1.5
Total liabilities 265.8 273.4 289.2
Nonfinancial corporate business 20.5 21.1 21.7
Nonfarm noncorporate business 239.1 244.4 256.9
REITs 6.2 7.9 10.5
Amount Outstanding at End
of Year
1997 1998 1999
Total Assets 302.5 329.5 372.2
Commercial banking 49.7 52.9 66.0
Savings institutions 59.5 57.0 59.4
Federally related mortgage pools 37.8 48.3 57.5
State and local governments 46.5 47.4 48.3
ABS issuers (Asset Backed Securities) 21.2 33.5 4.7
Life insurance companies 30.4 31.5 32.6
Government sponsored enterprises 17.3 18.1 22.7
Federal government 13.9 13.6 13.6
Nonfarm noncorporate business 7.0 7.0 7.3
State and local govt. retirement funds 5.0 5.2 5.5
Mortgage companies 5.2 5.3 5.3
Finance companies 29.0 2.7 5.1
Nonfinancial corporate business 4.0 2.0 2.6
REITs 2.1 2.1 1.6
Private pension funds 1.2 0.4 1.5
Household sector 1.5 1.5 1.4
Total liabilities 302.5 329.5 372.2
Nonfinancial corporate business 22.5 23.5 24.7
Nonfarm noncorporate business 264.5 282.4 322.1
REITs 15.4 23.6 25.3
Change 1999-00
2000 $'s %
Total Assets 411.1 38.9 9.5%
Commercial banking 77.7 1.7 15.1%
Savings institutions 61.3 1.9 3.1%
Federally related mortgage pools 66.0 8.5 12.9%
State and local governments 49.3 1.0 2.0%
ABS issuers (Asset Backed Securities) 48.7 7.0 14.4%
Life insurance companies 33.5 0.9 2.7%
Government sponsored enterprises 28.2 5.5 19.5%
Federal government 13.9 0.3 2.2%
Nonfarm noncorporate business 8.0 0.7 8.8%
State and local govt. retirement funds 6.0 0.5 8.3%
Mortgage companies 5.4 0.1 1.9%
Finance companies 6.1 1.0 16.4%
Nonfinancial corporate business 3.2 0.6 18.8%
REITs 1.0 -0.6 -60.0%
Private pension funds 1.3 0.2 -15.4%
Household sector 1.4 0.0 0.0%
Total liabilities 411.1 38.9 9.5%
Nonfinancial corporate business 25.9 1.2 4.6%
Nonfarm noncorporate business 357.4 35.3 9.9%
REITs 277.0 2.4 8.7%
Change 1991-00
$'s %
Total Assets 129.4 45.9%
Commercial banking 42.6 121.4%
Savings institutions -18.6 -23.3%
Federally related mortgage pools 39.9 152.9%
State and local governments 7.6 18.2%
ABS issuers (Asset Backed Securities) 45.5 1421.9%
Life insurance companies 4.2 14.3%
Government sponsored enterprises 14.0 98.6%
Federal government -18.0 -56.4%
Nonfarm noncorporate business 0.4 -4.8%
State and local govt. retirement funds 12.0 25.0%
Mortgage companies 2.7 100.0%
Finance companies 6.1 nm
Nonfinancial corporate business 2.6 433.3%
REITs -1.2 -54.5%
Private pension funds 0.4 44.4%
Household sector 6.0 75.0%
Total liabilities 129.4 45.9%
Nonfinancial corporate business 7.1 37.8%
Nonfarm noncorporate business 96.1 36.8%
REITs 26.1 1631.3%
The mortgage pool data includes those mortgages that are used as collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although for federally related agency-issued collaterized mortgage obligations (CMOs) and privately issued CMOs. CMOs are made up of pools of mortgages that are used as collateral for some other debt security. The cash flows off of the collateral are used to pay off the obligations of the new debt security. The agent that issues the collateralized debt makes money by selling the new debt at a price higher than the purchase price of the collateral. The reason that the new security has a higher price is that the cash flows off of that security can be tailored to the needs of the purchaser of the new debt security. There are many forms of CMOs. Multifamily CMOs data, shown in Asset Backed Securities, totaled $48.7 billion last year. This was a 1,422 percent rise from the $3.2 billion level that existed in 1991. Development of secondary markets for multifamily mortgages help to make the apartment financing market more liquid and encourages greater investment. Multifamily mortgage financing will continue to see even more development of its secondary markets. Activity in one other sector of the multifamily mortgage debt market is worth noting. Life insurance companies last year held $33.5 billion of multifamily mortgages. Their share of the market at 8 percent is down from the 10 percent share that was maintained for a relatively long period of time. REITs became a major factor in apartment financing in the second half of the 1990s. Capturing their impact on the apartment market in the Flow of Funds data requires looking at their mortgage debt on the liabilities side of the ledger The principal book of accounts of a business enterprise in which all the daily transactions are entered under appropriate headings to reflect the debits and credits of each account. . Mortgage REITs Mortgage REIT An REIT that invests in loans secured by real estate which derive income from mortgage interest and fees. mortgage REIT hold little multifamily mortgage debt, $1 billion last year. The Equity REITs Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. that maintain and acquire interest apartment properties had $27.7 billion in multifamily mortgage debt outstanding at the end of last year. This was a 1,631 percent increase over the 1991 level. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Sheehan People whose surname is or was Sheehan include:
An economist is an expert in the social science of economics.[1] . He can be reached at 703/893-9185 or by e-mail at gdad@erols.com. |
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