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NHC members call for stability and liquidity in multifamily lending

by Ethan Handelman, National Housing Conference

This week, two new white papers, both of which are from NHC members, called for a strong government role in multifamily mortgage finance. The papers highlight the need for reliable capital sources in all markets, mechanisms for getting private capital to take risk ahead of government, and the strong track record of Fannie Mae and Freddie Mac in multifamily lending, even during the crisis. These principles have been a consistent theme of advocacy around mortgage finance for multifamily, for instance, in the NHC paper and principles released earlier in the crisis.

The National Multi Housing Council and the National Apartment Association jointly released “Key Principles for Preserving Liquidity and Stability for Multifamily in a Reformed Housing Finance System.” The paper lays out the need for multifamily rental housing and the financing that supports its construction, refinancing, and capital improvements. In particular, the paper articulates the need for carefully calibrated government guarantee role to ensure that capital is available in all markets that need rental housing finance, not just the handful of major markets that attract capital even in down cycles.

The Mortgage Bankers Association’s Multifamily Task Force issued, “Ensuring Liquidity and Stability: The Future of Multifamily Mortgage Finance and the Government-Sponsored Enterprises” which builds on MBA’s earlier blueprint for mortgage finance reform to call for a system of private capital finance of multifamily housing at a securities level, with the guarantee providing only catastrophic backing. The paper also rebuts the Federal Housing Finance Agency’s (FHFA) approach to multifamily by proposing that policy planning focus on how reformed GSE multifamily platforms can best create a stable, liquid market, rather than a narrow evaluation of whether the platforms can operate without government guarantee.

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