Monday, March 18, 2013

Government Guarantee Essential for Meeting Demand for Multifamily Living via NMHC

Housing finance reform must include a federal guarantee for multifamily mortgages. This was the key message from Peter Donovan of CB Richard Ellis and immediate past chairman of the National Multi Housing Council (NMHC), speaking at the American Enterprise Institute (AEI).

“The elimination of a government guarantee of any sort to avoid a possible crisis, that is not supported by the facts, to be replaced by a private capital market that has not shown itself to be ready, willing, able, disciplined or reliable would truly be a crisis of our own making and for what purpose,” said Donovan.

In stark contrast to their single family programs, the government sponsored entities (GSEs), including Fannie Mae and Freddie Mac, use stringent and standard-setting underwriting for their multifamily programs – leading to a default rate of just .25 percent. Private-market sources of multifamily capital like CMBS have a default rate of 15 percent. In addition, the GSEs ensure that capital is available for apartments in all markets at all times, not just top-tier properties in major markets.

Read more...Government Guarantee Essential for Meeting Demand for Multifamily Living - NMHC - National Multi Housing Council - NMHC

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