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In this Issue
 Fannie Mae’s PDP Program Streamlines Transactions
NMHC Survey Finds Apartment Markets Gaining Strength
Industrial Market Bounces Back
Condo Market Cools Its Heels
Fannie Mae’s PDP Program Streamlines Transactions
By Michael A. Bellissimo
 During the first quarter of 2006 Fannie Mae initiated the PDP (Preferred Delegation Plus) program entrusting greater delegated authority to its DUS lenders. The DUS lender can now offer their customers an increased capacity to make decisions quickly.
Eligible transactions include 3Max, Tier II loans less than $25 million, Tier III loans less than $35 million and Tier IV loans less than $50 million. Fixed-rate and adjustable-rate cash or MBS transactions, including cash ARMs, are also eligible for PDP.
PDP gives lenders the ability to relinquish certain waivers without seeking the direct approval from Fannie Mae. It remains the lender’s responsibility to judge whether the loan parameters and waivers are properly structured and underwritten consistent with both DUS and sound credit standards. It should be noted that Arbor’s waiver approval rate through Fannie Mae reamins 99.9 percent.
In a further effort to improve certainty and efficiency of execution Fannie Mae undertook a complete review of its competitive position in the current market environment. In conjunction with five other DUS chief underwriters, I worked with Fannie Mae to review existing processing and underwriting requirements with the intent to streamline the amount of paperwork customers need to submit during the course of a deal, expand the number of lender-delegated underwriting and loan document waivers and add more eligible products to the PDP mix. The panel’s recommendations were recently submitted for Fannie Mae’s executive review and approval and roll out of further enhancements are expected within the 3rd quarter.
Stand by for more improved efficiencies that will enable Arbor to be more pro-active in meeting changing market conditions and our Borrower’s needs.
Michael A. Bellissimo is Chief Underwriter of Arbor Commercial Mortgage in Uniondale, NY. He can be reached at mbellissimo@arbor.com.
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Did You Know?
As one of a select group of lenders approved under Fannie Mae’s Delegated Underwriting and Servicing (DUS™) product, Arbor originates and services multifamily loans, providing excellent terms and competitive, tiered pricing for the purchase and refinance of apartment properties. For more information, contact us at 1-800-ARBOR-10, or check out our website at www.arbor.com. |
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NMHC Survey Finds Apartment Markets Gaining Strength
According to the July numbers released by the National Multi-Housing Council (NMHC) Survey, apartment markets are on the upswing. In fact, the NMHC says 75 percent of those who responded to the survey reported tighter overall market conditions by citing lower vacancy rates, higher rents or both.
The surging apartment market is one of the factors that contributed to a slight increase in the Market Tightness Index. According to the NMHC, the index reached 85 this quarter, the second-highest index number on record. While a reading above 50 indicates improving conditions, the index has been 80 or above for five consecutive quarters.
The report says sales activity fell off slightly as the Sale Volume Index dropped from 35 to 32, down significantly from the record-level of transactions reported in July 2005. And, despite rising interest rates, the DEBT Financing Index increased from 21 to 29, suggesting that borrowing conditions, although not ideal, have not worsened.
“Improving rental demand in the face of rising interest rates and declining sales volume attests to the strong outlook for the apartment sector,” noted Doug Bibby, NMHC’s president. “According to Harvard University’s 2006 State of the Nation’s Housing report, the number of renter households rose in 2005 for the first time in years. The report goes on to say that as echo boomers, same-age immigrants and second-generation Americans move into adulthood, demographic forces will favor rental housing over for-sale housing.”
Equity financing remained unchanged as the NMHC quarterly Equity Financing Index remained at 50.
For more information, go to www.nmhc.org.
Industrial Market Bounces Back
The industrial real estate market bounced back in the second quarter as absorption hit 52.8 million sq ft compared to 39.3 million sq ft in the first quarter and 53.5 million sq ft during the second quarter of 2005, according to a report by Colliers International.
The report states that many markets foresee leasing to remain robust in the coming months as most demand drivers are still in place. However, spiking energy costs are one cause for concern not only because of fuel costs on moving goods across the U.S. supply chain but for the economy in general.
According to Colliers International, second-quarter vacancies are at 8.3 percent, versus 8.5 percent during in the first quarter and 8.9 percent during the year-ago quarter. Warehouse rents increased by 3.2 percent during the second quarter, after declining slightly during the first quarter. Year-over-year rents are up by 3.9 percent.
New construction during the second quarter totaled 37.3 million sq ft, as compared to 38.4 million sq ft during the first quarter and 37.8 million sq ft worth of completions during the year-ago quarter, according to Colliers International. Warehouse space under construction jumped by 6 million sq ft during the second quarter to 114.5 million sq ft, versus 108.5 million sq ft in the first quarter and 84.6 million sq ft at the end of the second quarter in 2005.
For more information, go to www.colliers.com or www.mbaa.org.
Condo Market Cools Its Heels
The National Association of Realtors (NAR) is projecting a 10 percent decline in condo conversion activity for 2006 compared to last year. NAR is also reporting that sales of U.S. homes, including condos, has lowered and are continuing to remain on the market for longer periods of time.
The condo conversion craze has slowed since the peak in October 2005, in many cases, properties originally slated to be converted, have remained rentals. The main reason for this activity, according Marcus & Millichap, is the mounting interest rates that are driving up the monthly cost of home ownership, which leaves the apartment rental sector in a good place. This is notably shown in the 2006 forecasted increase in asking rents, up 3.9 %, to the marked decrease in vacancies.
For more information, go to www.realtor.org or www.marcusmillichap.com.
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| Flexible. Innovative. Creative. |
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Arbor is a national, full-service real estate investment firm focused on executing the highest level of expertise in order to provide clients with the most expansive, creative, and flexible range of lending products in the real estate finance industry. At Arbor, employees approach business in a results-oriented, decisive manner, striving to serve its customers quickly and efficiently while offering a boutique of unique product lines that distinguishes the company from traditional lending firms.
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Come see us at:
August 20-22
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September 7-9
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 To meet with us at any of these events, give us a call at 1-800-ARBOR-10 and ask for Marketing Specialist, Ingrid Principe or email at iprincipe@arbor.com
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