GSE Reform: Protecting Taxpayers and Housing Finance Programs that work
The movement to extract the GSE's from housing finance could have some unintended consequences. There is no question that policy to encourage homeownership at any cost is not the direction we want to revisit.
Many don't realize the role that Fannie and Freddie have played in providing liquidity to the rental housing market. Default rates on these properties is nominal (below 1%) and were largely underwritten with a great deal of responsibility.
Hopefully we don't let political posturing ruin some programs that are actually working.
Apartments are a critical component of the nation’s housing market, but history has made it clear repeatedly that the private market simply cannot meet a majority of the 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.
There is a pretty good piece just released by a consortium of multifamily owners which states their position on the matter. They obviously have their bias but it makes some good points to consider if you just want to end Fannie and Freddie because you think it will immediately solve a problem.
It is more likely that a new problem will emerge in a sector that will need to meet a growing demand for people who will not be buying a home anytime soon.
Again, I linked to this piece understanding that is one side of the story. I thought it does a good job of laying out some points we don't get to hear often. Here are some key points:
Do No Harm: Preserve Multifamily Lending Program
Protect the Taxpayer: Look to Proven Multifamily Model
Federal Government Involvement Necessary and Should be Appropriately Priced
Liquidity Support Should be Broad and Available at All Times, Not Just “Stop-Gap” or Emergency
Mission Should Focus on Liquidity, Not Mandates