Multi Housing News May 2012 : Page 6
executive insight Q & A satisfi ed FHFA is with Fannie Mae and Freddie Mac’s multifamily business performances, and in-vestor response to the REO-to-rental sales program. What is FHA’s mission with regard to the multifamily businesses of Fannie Mae and Freddie Mac? The agency’s mission regarding Fannie Mae and Freddie Mac multifamily businesses is: (a.) to pre-serve the value of their current and future assets and holdings; (b.) to monitor their business activities to assure safety and soundness, avoid credit losses and posed in the strategic plan, is there a need for an equally strong federal backstop for the multifamily and single-family sectors? As noted in the strategic plan, there are signifi cant differences between the single-family and multifam-ily markets which may require different approaches to the government guarantee so as to assure that all segments of the market have access to liquidity and can attract private capital. One of the stated goals under FHFA’s stra-tegic plan is to gradually reduce Fannie Mae and Freddie Mac’s dominant pres-ence in the marketplace. In the multifamily sector, has implementation of this goal begun? What are some of the steps? While it is accurate to say that the Enterprises (and FHA) continue to provide the majority of permanent fi nancing for multifamily properties, there is signifi cant recent evidence that this is changing and that other lenders are returning to the market, particularly large banks and insur-ance companies. The continued fl ows of new eq-uity investment into multifamily properties also relieve the demand for debt fi nancing from the Enterprises. This increased lending and investing activity is because multifamily is seen as a strong asset class with proven performance and positive returns during even the most diffi cult real estate cycles, and such continued improvement in prop-erty performance is expected during the current economic recovery. No specifi c steps have been taken yet to reduce the Enterprises’ role, but in-terim steps are being developed with the goal of encouraging private capital to continue to return to the market. Is there a date by which FHFA hopes to begin reductions in the volume of the GSEs’ multifamily mortgage fi nancing? support achievement of their public purpose mis-sion; and (c.) to support the companies’ continued delivery of liquidity to all segments of the multifam-ily fi nance market. What prompted FHFA to recently draw up the strategic plan for Freddie Mac and Fannie Mae’s conservatorships? After three years of conservatorship and with the fu-ture of the housing fi nance system not yet resolved, FHFA issued the strategic plan to further the public dialogue. The plan does not recommend specifi c so-lutions but instead seeks to clarify FHFA’s intent to leverage the Enterprises’ existing infrastructure and capacities to support the development of the future housing fi nance system. In the building of a new infrastructure for the secondary mortgage market as pro-FHFA’s New Strategy Chris Tawa describes plans for a Fannie Mae, Freddie Mac restructuring In February, the Federal Housing Finance Agency (FHFA) sent to Congress “a strategic plan for the next phase of the conservatorships” of the Govern-ment Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac. In the plan, the federal regulator and conserva-tor of Fannie Mae and Freddie Mac identifi ed three strategic goals for the “next phase” of the GSEs’ conservatorships: 1.) build a new infrastructure for the secondary mortgage market; 2.) gradu-ally contract the GSEs’ dominant presence in the marketplace while simplifying and shrinking their ` The plan does not recommend specific solutions but instead seeks to clarify FHFA’s intent...to support development of the future housing finance system. a operations; and 3.) maintain foreclosure preven-tion activities and credit availability for new and refi nanced mortgages. Based on FHFA’s stated strategic plan, one thing seems certain: FHFA is preparing for a new second-ary fi nance system with reduced Fannie Mae and Freddie Mac roles. In an interview with Keat Foong, executive editor of MHN , Chris Tawa, manager, Multifamily Housing Policy, Offi ce of Housing and Regulatory Policy at FHFA, says that the strategic plan does not intend to recommend specifi c solu-tions so much as to “clarify FHFA’s intent” to “sup-port the development of the future housing fi nance system.” Tawa also says that no specifi c steps have been taken to reduce the GSEs’ role in multifamily fi nancing yet, but that interim steps are currently being developed “to encourage private capital to continue to return to the market.” Tawa also answers MHN ’s questions about how 6 May 2012 | Multi-Housing News
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