GSEs Release Report on Their Multifamily Businesses

The Federal Housing Finance Agency (FHFA) released reports prepared by Fannie Mae and Freddie Mac on their multifamily businesses. The reports were conducted at the direction of FHFA pursuant to its goal of contracting Fannie Mae and Freddie Mac’s overall market footprint and generating potential value for taxpayers. As part of the 2012 Conservatorship Scorecard, the Enterprises were directed to analyze the viability of their multifamily businesses absent a government guarantee and review the likelihood of these models operating on a stand-alone basis after attracting private capital and making any adjustments for pricing if needed. “The GSEs were directed last year to analyze their multifamily businesses, and MBA and other groups had requested that FHFA make the reports available," said David H. Stevens, President & CEO of the Mortgage Bankers Association (MBA). "Given the role of multifamily rental housing in serving 16 million American households, MBA issued a white paper in December 2012 with recommendations on the future of this market. We look forward to reviewing the extensive data and analyses in these reports, including the role of a government guarantee in ensuring liquidity, to inform policy discussions on the future of multifamily rental housing and the broader housing finance market.” The reports conclude that without government guarantees, the multifamily businesses of Fannie Mae and Freddie Mac have little inherent value. The reports further conclude that the sale of these businesses would return little or no value to the U.S. Treasury and to taxpayers. The reports also highlight the fundamental tensions inherent in the government sponsored enterprise model that policymakers will have to consider as part of housing finance reform.