The chairman-elect of the Mortgage
Bankers Association told members of the Senate Banking Committee today that
policymakers must develop a long-term plan for government's role in financing
multifamily housing. E.J. Burke
testified before a hearing today titled "Housing Finance Reform: Essential Elements of the Multifamily
Housing Finance System."
Burke pointed to the strong credit
performance of government backed multifamily loans, even though the recent
financial crisis. The recent downturn,
he said, demonstrated the countercyclical role as one that only the government
can fill. But with the federal
conservatorship of Freddie Mac and Fannie Mae now lasting more than five years
it is clear that, while the current situation cannot last indefinitely, "policy
makers should ensure the ongoing stewardship of valuable resources that support
the multifamily market and utilize them to transition to a stronger housing
He called the multifamily rental market
a critical component of our housing system, in size, reach, and the households
that it serves. More than one in three
American households rent, he said, and more than 16 million of those households
live in multifamily rental housing.
the Committee considers the structure of the multifamily housing finance
system," Burke said, "we believe that policy makers should focus on ensuring
the availability of capital in all market cycles. MBA believes that
public policy should strike a balance that continues to attract and deploy
private capital in the multifamily market, while establishing a focused
government guarantee that enables liquidity and stability in all markets and all
A new system
should incorporate several structural recommendations including a wholly-owned
government corporation functioning as a catastrophic guarantor, administrator
of a risk insurance fund, and regulator of the secondary market. The guarantor would be funded by fees paid by
issuers. The new system should also
allow multiple, privately-capitalized issuers of government-guaranteed
securities into the secondary multifamily mortgage market.
multifamily assets of Fannie and Freddie and their infrastructure should be
preserved and carried over to the new system to preserve their value to
taxpayers and minimize market disruption, he said.
Burke said MBA
believes that proposed approaches should also be reasonable, flexible, and balanced
with regard to the need to attract private capital.