Discussions on GSE reform have started to heat up again. Last week, Doug Bibby represented NMHC/NAA in a bipartisan staff briefing for the Senate Banking Committee staff. The purpose of this staff briefing was to provide an overview of the role that the GSEs play in the multifamily industry and to highlight key areas that should be supported through any type of housing finance reform. Other participants included, the Mortgage Bankers Association (MBA), the National Low Income Housing Coalition, and Enterprise Partners.
The Senate Banking Committee has been holding a number of these listening sessions with representatives of the housing industry with the intent of gathering input on key issues and proposals on housing finance reform. As expected, Senator Mike Crapo (R-ID) announced this week that GSE reform is a key priority for the Banking Committee and that they would be holding hearings, not briefings, on GSE reform in early May.
Several proposals for reform have been circulating over the past few months all of which are garnering the interest of legislators, regulators and the industry.
Most recently the MBA released a comprehensive white paper describing their recommendations on how to move forward on housing finance reform. Highlights of the report include provisions to recharter the existing GSEs as new guarantors under a highly-regulated utility model where the securities they issue are backed by an explicit government guarantee but not the entity itself. The existing structures of the multifamily business models would be maintained with suggested changes. Finally, each new guarantor would be required to meet certain affordable mission guidelines as a requirement of their charter.
Also this week, the Independent Community Bankers of America (ICBA) issued their own set of guidelines, recommending to recapitalize the existing GSE, arguing that the model in place today is working, and addressing or changing the parts that are not. Key highlights include rebuilding the GSE capital base, focusing on taxpayer protection and maintaining the existing infrastructures the GSEs have in place. No mention of multifamily was included in their paper.
Two other models released in 2016 are a proposal from a Ed Demarco and Michael Bright and another from Jim Parrott, Mark Zandi, etal. The Demarco\Bright proposal recharters the GSEs into lender owned mutuals with Ginnie Mae (GNMA) providing a government guarantee. In contrast, the Parrott\Zandi proposal would fold both GSEs into a newly create government owned entity , creating one central provider for all housing related activities.
While all of these proposals have some ability to move the ball forward on housing finance reform they all face strong headwinds. More importantly for the apartment industry, only one of the proposals even mentions multifamily as a consideration which makes it critical that NMHC\NAA continue to work with legislators and regulators to insure provisions that are critical to our industry are included in any reform package.