A Way Out - Finance via Multifamily Executive Magazine

Ever since the federal government bailed out Fannie Mae and Freddie Mac in 2008, policymakers and stakeholders have struggled with the question of what to do with these challenged but fundamental components of the nation’s mortgage finance system. Most generally agree that the two government-sponsored enterprises (GSEs) can’t survive in their present form. Finding the right fix, however, is anything but simple, given the size of the GSEs’ footprint in housing finance.

Fannie and Freddie’s multifamily lending may make up a smaller portion of their portfolios than their single-family businesses, but the GSEs’ multifamily programs have been quite successful. They have default rates of less than 1 percent—just a tenth of the default rates in the single-family sector—and have produced roughly $7 billion in profits for the federal government since being placed in conservatorship. But the gravity of the problems with Fannie and Freddie’s single-family mortgage financing programs is overshadowing this proven multifamily track record. And as GSE reform evolves, a single-family focus could cost the apartment industry a critical source of financing, undercutting its ability to provide quality housing for the nearly 100 million Americans who rent.

Read more...A Way Out - Finance - Multifamily Executive Magazine