Small Apartment Mortgages from Freddie Mac

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Freddie Mac plans to originate mortgage loans for small apartment units between $1 million and $5 million. This was announced in a statement made by the head of multifamily operations in the government-sponsored enterprise David Brickman. This step is made as part of the efforts of the company to support affordable housing in the U.S.

The average size of a mortgage will be approximately $2.5 million. The company plans to originate loans with total volume of $1 billion in 2015. In the official statement, Brickman explained that the provision of financing for smaller mortgage loans and properties was critical, especially given the fact that this segment of the market caters primarily to the needs of low-income renters.

At present, the average size of an apartment mortgage loan from Freddie Mac is $15 million. The size of such a loan can reach $540 million for a single multifamily building.

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The plans of Freddie Mac include the packaging of the smaller mortgages into bonds which are to be sold to investors. The initial offerings will be of approximately $100 billion. The program’s rules and the guidelines for underwriting will be similar to those for the larger traditional mortgages offered by the company.

The announcement of the company’s plans to offer small apartment mortgages comes less than a month after the release of its Housing Market Outlook report in mid September. Back then, the chief economist of Freddie Mac, Frank Nothaft, commented that the apartment market had been reflecting the desire of many millennials to dwell in an urban setting and to have the flexibility to relocate.

At the same time, multifamily construction experiences a boom. The multifamily unit construction permits rose by 24% in July compared to the previous month while the multifamily unit starts rose by 33% during the month. In September, the construction of buildings with minimum of five apartments rose to its highest level since 2006.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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