Dees Stribling, Contributing Editor
Washington, D.C.–“The stakes are very high,” Bob DeWitt, National Multi Housing Council secretary, told the House Financial Service Committee this week regarding the future of Fannie Mae and Freddie Mac, particularly their future in multifamily finance. “Currently, the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac hold $5 trillion in mortgage debt (in securities and portfolio loans). This is equal to nearly 42 percent of the $12 trillion federal debt.”
As Congress mulls over what to do about GSEs and their relation to the mortgage markets, DeWitt stressed that policymakers reforms focusing on single-family mortgages shouldn’t impair the ability of GSEs to support the multifamily mortgage industry.
“If I can leave you with one message today, it is that a government-supported secondary market is absolutely critical to the multifamily sector and our industry’s ability to continue to meet the nation’s demand for affordable and workforce housing,” says DeWitt, who is also vice chairman and CEO of GID Investment Advisers L.L.C. “Multifamily may only represent 10 percent on average of the GSEs’ mortgage debt, but they currently provide nearly 90 percent of multifamily mortgage capital.”
The GSEs have come through with financing in good times and bad, and it’s especially important in bad times. “Over the past two years, they have provided $94 billion in mortgage debt to our industry at a time when virtually every other capital source left the market,” he said.
Going forward, the multifamily industry is going to need a healthy mortgage market more than ever, according to DeWitt. “The Harvard University Joint Center for Housing Studies estimates that we already have a shortage of some 5 million units of affordable rental housing,” he notes. “Our industry cannot meet the nation’s current or future housing needs—or refinance the approximately $200 billion in mortgage debt coming due over the next two years—without a fully functioning secondary mortgage market.”
Affordable and workforce housing will be critical in the 2010s, DeWitt says, because the days of pushing the envelope to increase U.S. rates of homeowners are probably gone for good, due to the popping of the residential bubble, and tight new underwriting standards for residential mortgages.
“This is important because the nation is increasingly relying on apartments as fundamental changes in our society are changing the types of housing we need to build,” he told Congress. “Housing expert Professor Arthur Nelson of the University of Utah projects that half of all housing built over the next 10 years will need to be rental housing to meet the dramatically changing landscape of demand.”