The Federal Housing Finance Agency (FHFA) recently released reports detailing the activity of the Government Sponsored Enterprises (GSEs) Fannie Me and Freddie Mac’s multifamily businesses. These reports suggest that Fannie and Freddie’s multifamily businesses have generated positive cash flow and in general have weathered the housing crisis better than the GSE’s single-family side. New multifamily originations increased during the housing crisis but have since returned to more normal levels. Given the inherent differences between the GSE’s multifamily and single-family business, FHFA determined that the goal of reducing their overall market footprint should be approached differently with respect to multifamily businesses. The reports conclude that the government guarantees of Fannie and Freddie make lending practical for multifamily affordable housing properties and that the sale of these businesses without the guarantee would return little or no value to the U.S. Treasury or to taxpayers. In addition, without a government guarantee backing the securities they issue, Fannie and Freddie project that their multifamily businesses would likely occupy a much smaller footprint in the multifamily finance market, with reduced production volume.
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