Washington is buzzing this week with the long-awaited announcement on housing finance reform on March 11, which makes clear that lawmakers recognize the unique role multifamily plays in providing 35 million Americans with an apartment home. NMHC/NAA were invited to a Senate Banking Committee briefing on the eve of the announcement where Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) unveiled their new bipartisan principles for reform. Based on the briefing, NMHC/NAA are encouraged that the bill set to be released in the coming weeks will preserve a government guarantee for multifamily and maintain much of the current structure of the multifamily platforms.
The principles closely follow a proposal released last year by Senators Bob Corker (R-TN) and Mark Warner (D-VA) and are receiving a strong statement of support from the White House. Overall the principles include replacing Fannie and Freddie with a new system of mortgage securities that will be federally-insured. Under the plan, private insurers would be required to take initial losses before any government guarantee that could result in American taxpayers footing the bill.
While the principles’ document is short on details regarding multifamily, subsequent conversations with Senate staff and Administration officials, lead NMHC/NAA to believe that the forthcoming legislation will incorporate many of the provisions that NMHC/NAA advocated for on behalf of the industry, including promoting stable, liquid and efficient mortgage markets, maintaining the current network of multifamily lenders and servicers, and supporting more opportunities for private capital debt providers to serve the apartment sector.
On the House side, Representative Jeb Hensarling (R-TX) isn’t showing any willingness to change his bill, the Protecting American Taxpayers and Homeowners (PATH) Act, which proposes privatizing Fannie and Freddie. The prospects for passage of housing finance reform are not high this year in general, but the principles serve as an important starting point for possible legislative action after the 2014 mid-term elections.