New Maloney bill promotes affordable multifamily housing
WASHINGTON — Congresswoman Carolyn B. Maloney (D-NY) today introduced new legislation, the Preserving Multifamily Housing Act of 2014, to prohibit the Federal Housing Finance Agency (FHFA) or other regulator from setting arbitrary limitations on the volume or scope of multifamily housing mortgages backed by Government Sponsored Enterprises (GSE) like Fannie Mae and Freddie Mac. Maloney says previous attempts by FHFA to limit multifamily housing would have limited the availability and affordability of apartments.
“More than half of all New York City residents are renters,” said Maloney. “Any attempts to limit the availability of multifamily mortgages, which are crucial to building and maintaining apartment buildings, makes housing less available and affordable, especially in urban areas. We were able to stop the last attempt to limit multifamily housing, but we need to ensure that no future attempts are made. The multifamily portfolios of Fannie and Freddie were not the cause of the housing bubble, and in fact represented one of the few bright spots in the vast sea of chaos that existed when the bubble popped. It makes no sense to arbitrarily limit multifamily housing, especially when we know how badly more affordable housing units are needed in places like New York City.”
In 2013, FHFA implemented an arbitrary 10 percent cut in the GSEs’ multifamily businesses, and was exploring additional restrictions for 2014. Maloney opposed additional restrictions in an October 2013 letter to Acting Director Ed DeMarco. In May of 2014, FHFA Director Mel Watt announced that the agency has no plans for further restrictions in 2014.
Fannie Mae and Freddie Mac are the guarantors of $63 billion of loans backing multifamily apartment buildings per year nationwide. According to FHFA’s own analysis, during the downturn the GSEs’ multifamily businesses performed extremely well: they posted consistent profits; did not suffer material losses on multifamily loans they guaranteed; served a countercyclical role by expanding precisely when other multifamily lender were fleeing the market; did not loosen their underwriting standards to capture market share prior to the crisis; and enjoyed significantly lower serious delinquency rates relative to other multifamily finance providers.
Maloney’s bill promotes liquidity and stability in the multifamily housing market. It would only allow GSE regulators or conservators to require cuts to multifamily portfolios if there is evidence that a reduction or limitation is necessary to ensure the financial stability of a GSE.