Report to FHFA: Housing Finance Reform in the Multifamily Mortgage Market
To advance housing finance reform, can the multifamily market attract more private capital and correspondingly reduce the government’s market footprint and risk exposure to U.S. taxpayers? That is the general question that our regulator and conservator, the Federal Housing Finance Agency (FHFA), asked of Freddie Mac in early 2012. Namely, can Freddie Mac’s multifamily business remain viable if it were restructured into a stand-alone entity without access to a government guarantee? If so, what would change as a result, both in our business as well as the broader marketplace?
This report addresses these questions in depth. Our key findings:
- Without access to a government guarantee, our multifamily business could attract private investment and produce net income;
- Our business would look and operate very differently;
- Withdrawing government support would have a negative impact on the broader multifamily market;
- We are prepared to implement changes to our structure; and
- Structural changes could be made in steps and over time, which would allow policymakers to address adverse market impacts as well as create policymaker optionality for long-term reform of the U.S. housing finance system.