business agreement

The news of the new bill to wind down Fannie Mae and Freddie Mac crushed the mortgage giants’ stock and sparked controversy over fairness and access to affordable housing. Fortunately new commercial mortgage lenders are stepping up with solutions which could enable entrepreneurial real estate investors to stop the gap and enjoy enhanced returns.

Bloomberg News coverage of the new Obama administration collaborated bill to close done the nation’s two massive mortgage agencies which have been doing the bulk of home loan lending did more than “clip” the wings in terms of share value.

Share prices of Fannie and Freddie immediately dove by as much as 44% on the news. By March 12th, 2014 Fannie Mae’s share price had dipped below $4.

Some are not happy that this ‘wind down’ is coming just as the huge mortgage entities are beginning to turn in billions in profits, after being taken over by the government. Others are simply concerned that the evaporation of these firms will wipe out affordable housing.

Between the extinction of Fannie Mae and Freddie Mac and their low down payment home loans and the huge number single family homes that have become monopolized by giant private equity and hedge funds it could quickly become a lot tougher for many to buy a home, and more expensive to rent at the same time.

This leaves a big gap in the housing market for real estate investors willing to come in and either offer seller financing assistance to eager buyers or commit to offering affordable rentals.

Whether this is tackled through single family homes or multifamily apartments, the big question is where the money to acquire and make units rent ready is going to come from.

Blackstone made the headlines last year with the launch of B2R Finance. B2R was created to help small to medium investors with portfolios to access their pent up equity and expand.

Cerberus’ unveiled a similar move with FirstKey Lending. However, after funding a slew of multi-million deals in this niche FirstKey has gone even further to offer new loan products. Among these include a new acquisition – bridge loan which finances the buying and renovating of portfolios of homes, and rolls into a permanent loan for long term hold.

This not only provides the liquidity the middle market needs, but the cost efficient edge of a private equity fund with fatter margins.

Crowdfunding has also received a bump up with new platforms providing built in solutions to help promoters stay on the right side of the new SEC rulings and making it easier to raise funds.

There are still plenty of investment opportunities open, even in Worcester County, MA. The only piece of the puzzle left is who will handle the property management.