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A Fannie Mae for retail centers?

Commercial Real Estate Agent with Paul Johnson and Associates

This could give a boost to retail development if this action were to pass. 

- Erik

A Fannie Mae for retail centers?

A federally chartered, privately funded loan guarantee program could help turn capital spigots back on for retail real estate, observers speculate. Such a program could mimic the apartment-financing program Fannie Mae ran successfully for 20 years.

"Whatever its shortcomings in the single-family mortgage business, Fannie Mae has developed a highly effective program," wrote George Gellman, chairman of The Benchmark Group of Cos., in a white paper for ICSC.

Fannie Mae works like this: A developer goes to a Fannie Mae-designated underwriter, usually a bank, which then recommends an appropriate mortgage to Fannie Mae. Fannie Mae guarantees that mortgage for an annual insurance premium the developer pays. The underwriter agrees to guarantee a portion of the loan and receives its own commensurate insurance premium from the developer.

"From an applied economics perspective, everyone's interest is aligned," Gellman wrote. "Once the mortgage has a government guarantee, it can be easily sold to insurance companies, pension funds or Wall Street." New legislation, Gellman speculates, would direct a government agency, most likely the FDIC, to launch the program.

Posted by

Erik Johnson, CCIM
Paul Johnson & Associates
4633 South 14th
Abilene, TX 79605
325 698-5661 office
325 692-8508 fax
325 439-0186 mobile

Jeremy K. Frost
Keller Williams Realty - Dripping Springs, TX
Associate Broker, ABR,CNE,CRS,ePro,PSA,RENE,SRS

Thanks for sharing...it's great posts like this one that make active rain such a great place!

Jan 22, 2010 01:41 AM