Multifamily mortgage lending is thriving despite rising interest rates.

Freddie Mac said it has bought nearly $5.2 billion of multifamily mortgages in the first nine months of this year, more than twice its multifamily volume for all of 1998. Fannie Mae said it bought $9.8 billion in the nine months, slightly ahead of the pace last year, when it bought $15.5 billion.

Mortgage lending generally has been hurt by rising rates, which quelled the refinancing of loans that drove volume higher last year. But multifamily loans have "prepayment lockout provisions," which inhibit refinancing in lower interest rate environments, said Rick DePetris, director of multifamily controls at Fannie.

Today's environment is favorable for multifamily financing, he said. The serious delinquency rate on Fannie's multifamily loans, Mr. DePetris said, reached an all-time low of 0.12% in September, down from 0.15% in August. He said that because of year-2000 fears, there is some doubt that volume will be as strong in December.

Freddie said it has provided financing for about 6,000 multifamily properties valued at more than $19 billion since 1993, when it formed its "program plus" network of multifamily lenders and servicers. These properties, mostly for people at or below area median income, include more than 688,000 rental units, the company said. Freddie said the program also has provided $360 million in financing for seniors and assisted-living and $665 million of bond credit enhancements.

Most of Fannie's multifamily business comes through its delegated underwriting and servicing program, in which lenders underwrite loans without prior approval from Fannie, Mr. DePetris said. The program began in 1988.

Fannie bought $10.1 billion of mortgages in October, down from $15.2 in September. Its commitments to buy mortgages rose to $8.8 billion, from $7.4 billion. Issuance of mortgage-backed securities was also down to $17.5 billion, from $20.4 billion. Fannie's net interest margin remains at 100 basis points, the same level as in September.

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