Freddie Mac SBL
There has been a lot of drastic changes recently and likely more to come. What is the consensus about the future of the program? Leverage, DCR, cash out, geographic markets.
[{"id": "exw5jk9", "text": "They\u2019ve burnt through most of their budget for the year. They\u2019re around for the long run but they\u2019re pulling back now because they\u2019ve almost met their quota for the year", "replies": [{"id": "exw5uan", "text": "This", "replies": [], "depth": 2}, {"id": "exx3g1u", "text": "Can you walk me through this or point me where to I can read more? I'm likely getting into SBL lending as a fresh graduate soon and was not aware there was a budget or quota to be met.", "replies": [{"id": "exyw8ez", "text": "All lenders have budgets/quotas. Freddie is no different it\u2019s just a way bigger budget. \n\n\nFreddie SBL is a great way to start your CRE career. I wouldn\u2019t worry", "replies": [{"id": "ey1ktgj", "text": "Thank you!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "exw6bvo", "text": "In addition to not increasing the allocation of funds, Freddie spreads are also increasing as they do not want to encourage more cash out activity. Has not happened to me yet but I am hearing that borrowers are getting re traded on some deals where submissions fell behind. \n\nEdit: My loans are larger, not SBL, but the same holds true.", "replies": [], "depth": 1}, {"id": "exw6e5z", "text": "What changes exactly? I'm possibly about to start working in SBL. What should I know about the future of SBL before taking the position (production analyst).", "replies": [{"id": "exx197v", "text": "Small business loans??", "replies": [{"id": "exx27y6", "text": "Small balance loans.", "replies": [{"id": "exz4v23", "text": "Thank you!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "exwn6oj", "text": "agreed with the comment on Freddie hitting their caps early. I am in cmbs and we are seeing 10 times more multi now given agencies are no longer the most competitive option. We never see multi typically.", "replies": [{"id": "exwx2a3", "text": "Do you mind expanding on what is going on here? I'm likely about to get into an SBL role, just graduated a few months ago.", "replies": [{"id": "exy6qzr", "text": "I\u2019ll help you out Mr. recent graduate, just remember me when I\u2019m old and busted and you\u2019re the new hotness. \n\nFreddie and Fannie have volume caps which are determined by FHFA at the beginning of the year. This year they both ran hot and used way more of their caps through the first half of the year than they should\u2019ve. As a result, they\u2019re dialing back volume at the moment. They\u2019re doing this by pushing out spreads and pulling back on credit simultaneously. \n\nSBL is an interesting space. Freddie SBL tends to make some crazy aggressive loans from a credit standpoint, while offering competitive pricing. This lead to them being the most competitive capital source in the space and a shit load of volume (at least when the wheels weren\u2019t falling off). Freddie has intentionally become much less competitive for cap reasons over the last month. \n\nThe yield curve inverted yesterday, we\u2019re going into an election year, agencies are freaking out about their volume caps, and the new FHFA head may very likely make wholesale changes to agency lending on the coming scorecard. It\u2019s an interesting time to be in the business. \n\nYour job is safe.", "replies": [{"id": "ey1ksqi", "text": "Thank you! Great info.", "replies": [], "depth": 4}, {"id": "eyacc8j", "text": "I\u2019ve been in sbl for 4 years. Usually the summer is slow. This year they blew the doors off.", "replies": [{"id": "eyl5j1f", "text": "How do you like working in SBL? What do you do?", "replies": [], "depth": 5}], "depth": 4}, {"id": "eym0nqq", "text": "What\u2019s interesting about the current pricing environment is that this isn\u2019t even about their cap. This is more about production dollars as a whole and the agencies not wanting to appear monopolistic in the eyes of the regulator. That\u2019s why green and uncapped affordable are still coming in as wide as they are. In my opinion this is more political management than it is cap management.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]