The new chairman of the Mortgage Bankers Association thinks Congress finally seems to be getting serious about reform of the government-sponsored enterprises.
The commercial mortgage banker is also happy legislators are thinking about transferring their multifamily portfolios to the private market.
The MBA has been very engaged in trying to influence the direction of housing finance reform by working with policymakers, issuing white papers and testifying on Capitol Hill.
The incoming chairman recently testified before the Senate Banking Committee on Fannie Mae and Freddie Mac’s multifamily businesses, and he was impressed by the senators’ interest in a transfer of the GSE’s multifamily platforms to the private sector.
The GSEs (Fannie and Freddie) have been in conservatorship for five years. “It seems there is momentum to try to get something done,” Burke said in an interview.
Burke will be installed as the new chairman on Oct. 27—the first day of the MBA annual conference in Washington. He succeeds Debra Still.
A native of Buffalo, N.Y., Burke is executive vice president and group head of KeyBank Real Estate Capital.
The Cleveland-based banking company provides its clients with a comprehensive shop for commercial real estate services.
KeyBank offers Fannie Mae, Freddie Mac and Federal Housing Administration multifamily loans. “We also have our own proprietary commercial mortgage-backed securities program,” Burke said in an interview.
KeyBank is a major player. It is the fourth largest CRE loan servicer in the U.S. and it is the fourth largest loan syndicator for the REIT sector.
But being big doesn’t shield a company from government shutdowns or processing delays. KeyBank had Federal Housing Administration multifamily and skilled nursing home loans ready for processing when the Department of Housing and Urban Development shut down on Oct. 1. Now that the government has reopened, FHA has begun working through the backlog. Burke expects to receive firm commitments on the nursing home loans by the end of the year.
“It is hard to run a business when you can’t predict something like this,” he said.
Burke took his first MBA correspondent course in 1979. In 1994, he was working at Midland Loan Services and launched a CRE loan conduit program at the Commercial Real Estate Finance conference.
Seven years ago, he was invited to join the Commercial Board of Governors and ended up serving two years as vice chair and one year as the chair of COMBOG.
While serving as the COMBOG chair, “I was approached to see if I would agree to go on the national leadership ladder.” And now he is the new MBA chairman.
“It is a lot of work,” Burke said. “Before I got involved in MBA, I used to play a lot of tennis. I still like to play. I just don’t have as much time.”
As the MBA’s new chairman, Burke wants to see more member engagement.
“We are a member-driven organization. Our staff is very dependent on the members to provide them with information,” to shape MBA’s agenda.
In testifying before the Senate Banking Committee, the chairman-elect was struck by the senators’ concern about the shortage of apartments in small towns and rural communities. The senators noted their communities are doing well with low unemployment. But apartments are hard to come by.
Burke realized that these senators view GSE reform as a way to help their communities back home.
“With the proper incentives,” he said during the interview, more multifamily financing could reach those small towns.
Burke along with other multifamily experts testified that the Fannie and Freddie multifamily platforms are valuable assets and should be transferred to private entities that will continue to serve the multifamily market.
Throughout the financial crisis and economic downturn, the GSEs continued to purchase multifamily loans and generated positive cash flows—unlike the single-family side, which crippled Fannie and Freddie and forced the Treasury Department to bail them out.
Moving Fannie and Freddie’s multifamily businesses to the “private sector through a sale or public offering—with continued access to a government guarantee—would likely return substantial capital to the U.S. Treasury,” Burke testified on Oct. 9.
He stressed that the private multifamily entities would be regulated by a new government agency—the Federal Mortgage Insurance Corp.—that would also provide a government-backed guarantee for multifamily and single-family loans and securitizations.
Looking back on the Senate hearing, Burke said he “sensed the committee members were receptive” to the ideas the MBA advocated.
The new MBA chairman also senses that Congress is poised to advance legislation to wind down Fannie and Freddie and replace them with a new housing finance system. And the MBA will be part of that effort. “I am hopeful we will make some progress,” he said.
