The Mortgage Bankers Association (MBA) has released a white paper that reviews the importance of multifamily rental housing and examines the role of the government-sponsored enterprises (GSEs) in multifamily housing finance.
The white paper, titled ‘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.Â
The white paper also addresses key questions about the future of the GSEs' multifamily businesses, as per the Federal Housing Finance Agency's February 2012 strategic plan.Â
The white paper contains five primary recommendations:
- Federal 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’;
- Well-regulated entities should be eligible to issue government-backed multifamily securities;
- Stewardship of the existing GSE assets and resources on behalf of taxpayers should be a core consideration of any policy action; and
- The long-term liquidity and stability of the multifamily finance system in all market conditions should be the core driver of whether the GSEs' multifamily business should operate on a standalone basis relative to their single-family credit guarantee businesses.
‘We recognize the critical counter-cyclical 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,’ says Brian Stoffers, chairman of the MBA's GSE Multifamily Task Force 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.’
The white paper is now available online.