House hears possible role GSEs will play in rental assistance
The House Committee on Financial Services hearing today on the future of the government-sponsored enterprises highlighted the importance of backing affordable rental properties going forward. Michael Bodaken, president of the National Housing Trust, a nonprofit committed to preserving affordable rental housing in the U.S., said in testimony the rental housing market would have "frozen" in 2008 and 2009 without the GSEs. He continued to say that future housing intermediaries, whether its Fannie Mae and Freddie Mac or some version, should provide financing for apartments. Many of those properties, he said, house families earning less than 80% of the country's median income. Bodaken noted that the GSEs' serious delinquency rate on multifamily properties remained at less than 1% between 2005 and 2009, while delinquencies on single-family residences grew from 5% to 11.5% in that time. As those families moved out of foreclosed homes and demand for rentals increased, rents were raised and low-income households were pushed out of the market, Bodaken said. Apartment starts, however, remain at the bottom of a 20-year curve, below 75,000 starts in the first quarter for apartments with five or more units, according to Witten Advisors, which studies the market. Phillip Swagel, a visiting professor at the McDonough School of Business at Georgetown University, said in testimony rental assistance, which is an important policy decision, should not be left to the GSEs. "For reform of housing finance, it is essential that these activities be part of the public sector and not carried out within successor firms to the GSEs," Swagel said. "Congress should vote on the use of all public resources, including for affordable housing activities." But Rep. Barney Frank (D-Mass.), chairman of the committee, said the GSEs should follow the example of the Federal Home Loan Banks, where private entities make decisions on profit alone and a fixed percentage of those profits are diverted to subsidized housing. "In my opinion," Frank said, "it should be rental properties being subsidized." Write to Jon Prior.