The NMHC/NAA Joint Legislative Program offers this white paper outlining the key principles a reformed housing finance system needs to embrace to preserve liquidity and stability for the well-performing multifamily sector.
While the apartment industry strongly supports the return to a system dominated by private capital, an ongoing federal role is critical to ensuring that capital is available in all markets at all times. Even in healthy economic times, private capital has not been able to meet the broad liquidity needs of the apartment industry. A private-only housing finance system results in an overabundance of capital for high-end properties in top-tier markets, but leaves smaller markets underserved.
A reformed housing finance system should retain the successful components of the existing multifamily programs in whatever succeeds them. The key principles for multifamily housing reform as outline by the NMHC/NAA white paper are:
- Provide Access to Federal Credit Support
- Provide Broad Liquidity Support at All Times, Not Just “Stop-Gap” or Emergency
- Mission Should Focus on Liquidity, Not Mandates
- Restrict Federal Credit Support to the Security Level
- Support Private Capital and Protect Taxpayers Through Effective Guarantee Structure and Pricing
- Encourage Competition
- Empower a Strong Regulator
- Impose Effective Capital Requirements
- Retain Limited Portfolio Lending (without a Federal Guarantee) While Expanding Securitization
- Reduce Existing Portfolios in a Responsible Manner
- Create Certainty and Retain Existing Resources/Capacity During the Transition