NAA/NMHC Testify on Fannie/Freddie Reform 

NAA/NMHC testified on March 23 before the U.S. House of Representatives’ Financial Services Committee on the issue of housing finance reform. The hearing kicked off efforts to find a long-term solution for Fannie Mae and Freddie Mac.

Bob DeWitt, Vice Chairman, CEO and President of GID Investment Advisers testified on NAA/NMHC’s behalf. The testimony explained how the apartment industry relies on the liquidity pro-vided by Fannie and Freddie to develop and maintain affordable and workforce housing. It pointed out that without a fully functioning secondary mortgage market, the apartment industry cannot meet the nation’s current or future housing needs—or refinance the $100 billion to $200 billion in mort-gage debt coming due over the next two years.

Importantly, Chairman Frank thanked DeWitt for making explicit the importance of separating multi-family and single-family housing in his comments, noting, “I agree and we will be very careful and we ask you to work with us to make sure that we don’t fail to recognize that.”

DeWitt identified six key principles that NAA/NMHC believe should guide reform efforts:

1. The public mission of the federally supported secondary market needs to be clearly defined and should be focused primarily on using a government guarantee to provide a steady source of liquidity to the multifamily mortgage market.
2. Any new or revised secondary market system must explicitly recognize the capital needs of the apartment sector.
3. Lawmakers should not create a new federal secondary market entity or entities, but should instead use government support to leverage private capital.
4. Any new system should provide access to explicit federal guarantees for multifamily housing mortgage securities and loans, and companies accessing this credit should pay a fee to support this backstop.
5. Since multifamily housing loans are larger and not as easily commoditized as single-family loans, any new system should allow for some portion of multifamily loans to be held in port-folio instead of being securitized.
6. During transition years, it is critical to retain the resources and capacity of the existing Government-Sponsored Enterprises (GSEs).

The written testimony is available at http://tinyurl.com/4td5kr. A Webcast of the entire hearing, including NAA/NMHC’s witness, is available at http://bit.ly/c5jcF2.

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