The Federal Home Loan Mortgage Corporation, responding to complaints that its return to the multi-family market is limited initially to refinancings, has pledged to begin securitizing originations as soon as possible--by the end of the year, perhaps.

But Thomas J. Watt, senior vice president for multifamily operations at Freddie Mac, was firm in his insistence that the company, badly burned in the multifamily market by the time it got out in September 1990, would move ahead only when it was certain that its own employees and the seller/servicers were ready for the task.

"As a matter of fact, our customers advised us it was a good time to do refinancings," Watt said. "Interest rates are the lowest in many years, and well over 40% of our portfolio has coupon rates over 10%."

But that strategy isn't going to meet the need for multifamily housing, said Bronwyn Morgan, director of multifamily housing for the Mortgage Bankers Association. Even the refinancings, she added, are limited to Freddie Mac's own portfolio. "It's the best thing for Freddie Mac's portfolio, but it doesn't do anything for most of the multifamily market," she added.

"We certainly can understand Freddie Mac's caution, but the process has taken a lot longer than anyone anticipated," Morgan said.

C. Austin Fitts, former assistant secretary for housing-federal housing commissioner at the Department of Housing and Urban Development, said she could understand Freddie Mac's caution, but that it may have been overdone. "I see a lot of nervous people ducking and bobbing," added Fitts, who is president of Washington-based Hamilton Securities Group and who served at HUD in 1989-90.

"Freddie Mac appears to be serious about getting back in the multifamily market, and they've hired good people," said Anthony S. Freedman, partner in the Washington office of the Atlanta-based law firm of Powell, Goldstein, Frazer & Murphy.

"I regret that it took two years to get there," added Freedman, who was deputy assistant secretary for planning and budget at HUD during the Carter administration. "Even if they've not gotten to the level of Fannie Mae, their entry still is significant."

The Federal National Mortgage Association is the only important source of funds for multifamily originations. The Federal Housing Administration, beset by scandal in its multifamily programs, it struggling to handle a backlog of multifamily loans that have gone bad.

The Freddie Mac initiative is the first of a three-part multifamily program that will make up to $1.5 billion available for the refinancing of multifamily properties by the end of 1993.

Watt said that initially, any refinancing must be handled by the approximately one dozen members of its Program Plus group, seller/servicers who meet stringent eligibility criteria. He said the company is working on new eligibility criteria for seller/servicers. Others can apply when those standards have been announced.

He also said that up to 5% of any loan can be used to meet refinancing costs of borrowers.

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