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Policymakers Must Consider Multifamily Role in Housing Finance

by devteam October 10th, 2013 | Share

The chairman-elect of the MortgagernBankers Association told members of the Senate Banking Committee today thatrnpolicymakers must develop a long-term plan for government’s role in financingrnmultifamily housing.  E.J. Burke</btestified before a hearing today titled "Housing Finance Reform:  Essential Elements of the MultifamilyrnHousing Finance System." </p

Burke pointed to the strong creditrnperformance of government backed multifamily loans, even though the recentrnfinancial crisis.  The recent downturn,rnhe said, demonstrated the countercyclical role as one that only the governmentrncan fill.  But with the federalrnconservatorship of Freddie Mac and Fannie Mae now lasting more than five yearsrnit is clear that, while the current situation cannot last indefinitely, “policyrnmakers should ensure the ongoing stewardship of valuable resources that supportrnthe multifamily market and utilize them to transition to a stronger housingrnfinance system.”</p

He called the multifamily rental marketrna critical component of our housing system, in size, reach, and the householdsrnthat it serves.  More than one in threernAmerican households rent, he said, and more than 16 million of those householdsrnlive in multifamily rental housing.</p

 “Asrnthe Committee considers the structure of the multifamily housing financernsystem,” Burke said, “we believe that policy makers should focus on ensuringrnthe availability of capital in all market cycles.  MBA believes thatrnpublic policy should strike a balance that continues to attract and deployrnprivate capital in the multifamily market, while establishing a focusedrngovernment guarantee that enables liquidity and stability in all markets and allrneconomic cycles.”</p

A new systemrnshould incorporate several structural recommendations including a wholly-ownedrngovernment corporation functioning as a catastrophic guarantor, administratorrnof a risk insurance fund, and regulator of the secondary market.  The guarantor would be funded by fees paid byrnissuers.  The new system should alsornallow multiple, privately-capitalized issuers of government-guaranteedrnsecurities into the secondary multifamily mortgage market.</p

The existingrnmultifamily assets of Fannie and Freddie and their infrastructure should bernpreserved and carried over to the new system to preserve their value torntaxpayers and minimize market disruption, he said.</p

Burke said MBArnbelieves that proposed approaches should also be reasonable, flexible, and balancedrnwith regard to the need to attract private capital. 

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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