The Mortgage Bankers Association (MBA) has released a white paper that underscores the importance of multifamily rental housing and examines the role of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, in multifamily housing finance going forward. The white paper and its recommendations were developed by MBA’s GSE Multifamily Task Force, a group of industry experts from MBA’s broad commercial/multifamily finance membership convened to focus on the future role of the GSEs in the multifamily housing market, which serves more than 15 million (one in seven) American households. The white paper addresses key questions about the future of the GSEs’ multifamily businesses raised by the Federal Housing Finance Agency’s February 2012 strategic plan.
Building on the groundbreaking 2009 report by MBA’s Council on Ensuring Mortgage Liquidity, the white paper, entitled, “Ensuring Liquidity and Stability: The Future of Multifamily Housing Finance and the Government-Sponsored Enterprises,” includes policy recommendations and lays out a framework for a government role in multifamily finance that attracts greater private capital, while outlining a government-backed insurance program to ensure the market has access to liquidity in all market conditions. The program would be funded through risk-based premiums paid by the entities that securitize the loans.
“We recognize the critical countercyclical role the GSEs have played in providing liquidity when private capital sources largely scaled back, and we see a need for an FDIC-like risk insurance program in the future state of multifamily housing finance,” said Brian Stoffers, MBA GSE Multifamily Task Force Chairman and President of CBRE Debt and Equity Finance. “Policies enacted going forward should reflect that necessary government role but also encourage private capital to enter and remain in the market as the primary source of financing for multifamily housing.”
MBA’s paper contains five primary recommendations:
►Our nation’s housing policies should reflect the importance of multifamily rental housing, the range of capital sources that support this market, and the need for liquidity and stability in all market cycles.
►Private capital should be the primary source of financing for multifamily housing with support from a well-defined government-backed insurance program that ensures the market has access to liquidity in all cycles.
►Well-regulated entities should be eligible to issue government-backed multifamily securities. These entities should be mono-line, funded by private capital, focused on securitization and serve the workforce rental market.
►Stewardship of the existing GSE assets and resources on behalf of taxpayers should be a core consideration of any policy action.
►The long-term liquidity and stability of the multifamily finance system in all market conditions should be the core driver of whether or not the GSEs’ multifamily business should operate on a standalone basis relative to their single-family credit guarantee businesses.
“I commend the members of MBA’s GSE Multifamily Task Force for highlighting the critical role of multifamily rental housing. These recommendations balance the role the federal government plays in multifamily housing finance with the need to continue to attract private capital into the market,” said David H. Stevens, MBA president and CEO. “MBA has worked, and will continue to work, with a host of stakeholders and industry groups to advance policy proposals that support a vibrant and balanced housing finance system.”
