Donovan: GSE Reform Must Support Affordable Multifamily Lending (NCSHA)

NCSHA
(3/3/2014 4:44 AM, NCSHA)

Any legislation advanced to reform the nation’s housing finance system should include a federal backstop for the multifamily market and take steps to support financing for affordable multifamily properties, HUD Secretary Shaun Donovan said earlier today. Donovan spoke at an event put on by the Center for American Progress to examine the impact of housing finance reform on the rental market.

In his opening remarks, Donovan told the audience that it is critical that Government-Sponsored Enterprises (GSE) reform address the multifamily market because the nation is suffering a shortage of affordable rental units that, “is real and is growing.” Multifamily housing is often overlooked during the debate over how to overhaul the GSEs (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks) Donovan argued, because many policymakers attach an unfair “stigma” on rental housing. Instead, Donovan offered, lawmakers should look at rental housing as just another avenue that Americans can use to pursue their dreams, just like homeownership

While acknowledging that Fannie Mae and Freddie Mac’s multifamily portfolios performed very well throughout the housing crisis, Donovan argued that neither firm should be allowed to continue functioning as is because it might cause an uncompetitive duopoly to form in the multifamily finance market. Instead, Donovan argued, GSE reform should establish a new market system with a federal guarantee that can be open to multiple private lenders who meet certain qualifications.