WASHINGTON, DC - National Multi Housing Council (NMHC) President Doug Bibby issued the following statement concerning today's release of the Obama Administration's proposal for reforming Fannie Mae and Freddie Mac. His statement is on behalf of NMHC and its joint legislative partner, the National Apartment Association.
"We commend the Administration for taking the first step in what will be a long process to overhaul the nation's housing finance system. The bursting of the housing bubble exposed serious flaws in the single-family sector. We would urge policymakers, however, to ensure that their reforms do no harm to the multifamily sector, which also relies on the GSEs, Fannie Mae and Freddie Mac, as a vital source of capital.
"The GSEs' multifamily programs did not contribute to the housing meltdown. In fact, their highly successful multifamily programs can serve as a model for a reformed housing finance system. Their default rates remain under one-half of one percent. They have helped finance millions of units of market-rate workforce housing without federal subsidy. They have sustained liquidity in all economic climates. And they have done so at no risk to the taxpayer.
"We are encouraged by the thawing in the private capital markets and support a return to a marketplace dominated by private capital. But lawmakers need to understand that even in healthy economic times, history has made it clear that the private market simply cannot meet 100% of the rental housing industry's capital needs.
"A federally backed secondary market is absolutely critical to the sector's health and our ability to continue to meet the nation's growing demand for rental housing. Between 2008 and 2015, nearly two-thirds of new households formed will be renters. That's six million new renter households.
"Attracting sufficient private capital to meet that demand requires an explicit federal government guarantee on multifamily mortgage securities and portfolio-held loans. Such a guarantee should be priced at an appropriate level that reflects the mortgage risk and the value of the government's credit enhancement and in such a way that it does not compete unfairly with private credit.
"We look forward to working with the Administration and Congress to build a world-class housing finance system that can provide safe, decent housing to all Americans."
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The National Multi Housing Council (NMHC) and National Apartment Association (NAA) operate a Joint Legislative Program and represent the nation's leading firms participating in the multifamily rental housing industry. NMHC/NAA's combined memberships are engaged in all aspects of the development and operation of apartment communities, including ownership, construction, finance and management. One-third of Americans rent their housing, and over 14 percent of all U.S. households live in an apartment home. For more information, contact NMHC at 202/974-2300, e-mail the Council at firstname.lastname@example.org or visit NMHC's web site at www.nmhc.org.
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