The Mortgage Bankers Association’s GSE Multifamily Task Force presented a white paper today, which discussed the future roles of Fannie Mae and Freddie Mac in multifamily housing finance. The paper called for a government role that attracts larger private capital and outlined a government-backed insurance program that ensures access to liquidity in all market conditions.
The program would be funded through risk-based premiums, which were paid by those who securitized the loans.
The paper titled "Ensuring Liquidity and Stability: The Future of Multifamily Housing Finance and the Government-Sponsored Enterprises" underscores the importance of multifamily rental housing and the roles of the government-sponsored enterprises.
"We recognized the critical countercyclical role the GSEs have played in providing liquidity when private capital sources large 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.
He added, "Policies enacted going forward should reflect that necessary government roles but also encourage private capital to enter and remain in the market as the primary source of financing for multifamily housing."
MBA argues the industry policies need to reflect the importance of multifamily rental housing, range of capital resources and the need for liquidity and stability.
The long-term liquidity and stability of the multifamily finance system in the market is expected to be the "core driver" as to whether or not GSEs’ multifamily business should operation on a standalone basis relative to single-family credit guarantee businesses.
Well-regulated entities should also be eligible to issued government-backed multifamily securities. The entities should be mono-line, focused on securitization by serving the rental market and funded by private capital.
A core consideration of any policy action should be the stewardship of existing GSE assets and resources on behalf of taxpayers.
"I commend the members of MBA’s GSE Multifamily Task Force for highlighting the critical role of multifamily rental housing," said David Stevens, MBA president and CEO.
He added, "These recommendations balance the role the federal government plays in multifamily housing finance with the need to continue to attract private capital in the market. 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."
The GSE Multifamily Task Force is a group of industry experts from MBA’s broad commercial and multifamily finance membership that focuses on the future roles of the GSEs in the multifamily housing market, serving more than 15 million households.