Investors need clarity on Fannie and Freddie

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The annual Summit of Housing Zelman is a small but elite of public and private manufacturers, mortgage lenders, investors and financial analysts, led by one of the analysts of the best known manufacturers, Ivy Zelman. When the conference started 18 years ago, it was mainly focused on residential housing. But now the conversations have widened – and this year’s conference has focused in particular on the multifamilial, GSE, work and earth.

Four years ago, the Zelman firm was acquired by Walker & Dunlop, a commercial funding and real estate consulting company. He is a multifamilial lender GSE (Fannie Mae and Freddie Mac). CNBC sat for a podcast with Willy Walker, his CEO.

Here are some protruding facts of our discussion and the wider conference:

Much of the conversation in Zelman surrounded interest rates, while the yield at 10 years again fell on Thursday at the start of the conference. Walker said he was surprised to know where interest rates are and do not expect them to stay there.

“If you had told me three weeks ago that we would have 4.01% over 10 years today, I would not have taken this bet,” he told CNBC. “The rates are much lower today than I thought.”

But he then noted that if you return to 1980 and look at the nine periods of the Fed prices during this 45 -year period, the reductions made in a recession environment reduced daring yields in the longer term. Apart from a recession, there was really no impact on long -term interest rates.

“So, if I expect us to see at least a reduction of 25 basic points, then probably another cup of 25 base points, even if you withdraw 50 base points from the short end of the curve, I do not expect it to have an impact on the long end of the curve,” said Walker.

For manufacturers as well as for multifamilial developers, the future of Fannie Mae and Freddie Mac is critical, and uncertainty around what the Trump administration will do with them was a hot topic in Zelman.

Walker noted that if commercial real estate has suffered largely in the past three years due to higher interest rates, multifamilial had an advantage. When CMBS banks or transmitters may not have lent, Fannie and Freddie were still on the market to provide liquidity.

Now, the conservative of the GSE, the director of the FHFA, Bill Pulte, as well as the secretary of the Treasury, Scott Bessent, would have said that there would be measures to ensure that private companies and finally on public procurement. Pulte recently told CNBC that the two would remain in government supervision and expect to sell about 5% on public procurement.

Walker said he had a lot of concerns about the situation for Fannie and Freddie, in particular given the recent reports of an argument between Pulte and Bessent who almost became physical. He compared the situation to that of the Flexible Coworking company WeWork several years ago, which, according to him, had no strong board to guide it.

“I am a listed company on the stock market. I have a very rigorous board of directors which has independent administrators,” said Walker. “There is nothing independence in the way Fannie and Freddie are managed from the point of view of the Council today.”

And as for the dust between Pulte and Bessent, Walker said: “The question there would be, who takes the lead? Who has the pen that says it is the action plan for Fannie and Freddie?”

Also among the concerns raised in the rooms of the Zelman conference: the field.

“We have no housing crisis, we have a land crisis,” said Adrian Foley, CEO of Brookfield Residential, land developer and house builder on one of the conference panels.

Unique and multifamilial unified housing manufacturers say they need more land rights and hope that the Trump administration will facilitate this by opening more federal land and helping to facilitate zoning restrictions.

“I love the equivalent of a flea law for housing,” said Foley in a CNBC interview.

Doug Yearley, CEO of Toll Brothers, said that even if there were enough land to rely, there are not enough workers to build there.

Small manufacturers said they had lost workforce due to the fear of ice raids on employment sites. There have been a lot of discussions at the Zelman conference on the training of more people to embark on the company, given the number of immigrant workers who feed the industry and are increasingly threatened with deportation.

Large public manufacturers constantly say that they have no major problems with ice raids on their sites, but they deplore the lack of work overall.

“We need a healthy immigration policy,” said Yearley on a panel. “You go to one of our original sites, and it is [like] The United Nations. “”