WASHINGTON—The National Housing Conference is trying to get Treasury officials to pay more attention to the multifamily side of Fannie Mae and Freddie Mac as the agency ponders ways to restructure them as well as the nation's housing finance system.
To date, the GSEs have made headline news because their single-family programs are drowning in red ink—but their multifamily portfolios are healthy.
The percentage of multifamily mortgages 90 days or more past due is under 1%. Freddie's serious delinquency rate is only 32 basis points.
But like the single-family business, the GSEs—along the Federal Housing Administration—are responsible for over 90% of the multifamily loans originated in the U.S. (Of course, multifamily volumes are dwarfed by single family.)
"The soundness of the GSEs existing book of multifamily business opens up a range of policy options that merit consideration for more effectively meeting the nation's current multifamily housing needs," the NHC says in a new policy statement.
Fannie and Freddie have been in conservatorship for 25 months, and Treasury's task is to come up with a plan that will eventually liquidate their giant portfolios and create a new mortgage financing system.
Treasury secretary Timothy Geithner has pledged to deliver that plan to Congress in January.
The NHC wouldn't mind if Treasury chooses to resolve the multifamily finance system first—before it tackles single-family.
"Multifamily housing finance must be addressed directly and separately from single-family finance," said NHC president and chief executive Maureen Friar. "That is the only way to ensure that renters have an adequate supply of multifamily properties with affordable rents."
Like most housing groups, the NHC believes the government backing will continue to be critical to ensure the availability of long-term fixed-rate mortgages.
One approach that is being talked about calls for the creation of new enterprises that securitize mortgages backed by a government guaranteed wrap.
The NHC wants Treasury to experiment with these wraps by using GSE underwritten multifamily loans now, before the new enterprises are chartered.
"Whatever solution is devised for Fannie and Freddie, it should work equally well for multifamily and single family," said Jeffrey Lubell, executive director of NHC's research arm, the Center for Housing Policy.
The NHC was formed in 1931 to promote safe, decent and affordable housing and enjoys the support of many housing groups and companies. It likes to call itself the "United Voice for Housing."
In staking out its new policy position, the NHC is urging Treasury and the Federal Housing Finance Agency to remove restrictions on the GSEs' multifamily business.
The advocacy group would like the GSEs to provide reasonable pricing on forward commitments for multifamily construction loans. The NHC also wants the GSEs to provide more credit enhancements for bonds issued by state housing finance agencies.
"It may take several years to transition to a new housing finance system. During this interim period, the existing GSE channels for supporting multifamily lending should be maintained to ensure the ongoing availability of credit for multifamily rental housing," the NHC policy statement says.
