NAA/NMHC Summary of Tuesday's White House Housing Finance Conference

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On Tuesday, NMHC President Doug Bibby represented NAA/NMHC at a high-level White House conference on the future of housing finance. The half-day session featured a diverse group of stakeholders gathered to begin deliberations on how to reform Fannie Mae and Freddie Mac. The meeting was co-hosted by Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan and included senior staff of the Treasury Department, HUD and the National Economic Council.

This email is a summary of the event. First, it should be noted that this conference is one step in what will be a very long and complicated process. Transitioning to a new housing finance system will take years. Figuring out what it should look like will also not be a quick exercise. But with this conference and hearings planned this fall by House Financial Services Committee Chairman Barney Frank (D-MA), work is officially underway.

Of course, NAA/NMHC have been active on this issue since the GSEs were put into conservatorship back in 2008. Through Congressional testimony, meetings with the Treasury Secretary and official comments, we have been working hard to ensure that multifamily is not lost amidst the giant shadow cast by the single-family meltdown. We used this conference as an opportunity to reiterate our key messages to Congress:

The GSEs' multifamily business has performed excellently with default rates below one percent—a stark contrast to their single-family business.

Because of the liquidity provided by the GSEs, the apartment industry has been able to produce more than 10 million units of housing that's affordable to the workforce in the past 15 years, much of it without any direct federal subsidies.
Our country is increasingly relying on rental housing because of changing demographics, but apartment loans are much more complicated than single-family loans, and history has shown that private capital alone cannot meet our industry's needs. Especially during the lengthy transition to a new housing finance system, there must be an explicit federally backed credit facility for multifamily to have any hope of meeting our future housing demand.

What heartened us the most about Tuesday's event was the fact that multifamily was clearly not an afterthought. In an indication that our efforts are having an effect, a common theme in the panel discussions was that this isn't just about ownership, it's also about rental housing. That is a long way from when we started talking about a balanced housing policy nearly ten years ago. Then multifamily was hardly on the radar of most policymakers.

Even more heartening was the fact that a number of panelists reiterated NAA/NMHC's calls for a more balanced housing policy. During both of the main panels, there was robust discussion about the need to address the unbalanced nature of our housing policy.

Among some of the remarks:

"We can't rebalance national housing policy and reform mortgage finance and secondary markets without explicitly addressing the market distortions caused by the government's disproportionate support of homeownership over renting...According to CBO, the federal government spends about $4 supporting homeowners for every $1 it invests in low-income rental housing." Michael A. Stegman, Director of Policy and Housing, John D. and Catherine T. MacArthur Foundation
"Today's discussion is critical to ensure that we have a balanced national housing policy in which Americans have real choices about where they want to live." Shaun Donovan, HUD Secretary

"I think we've not paid close enough attention to rental housing and the advantages of that. Not everyone can or should have a single-family home, and I think government should think more clearly about how it can help with respect to rental housing." Mark Zandi, Chief Economist, Moody's Analytics

"The homeownership rate in the U.S. is no higher than it is in similar countries like the U.K., Canada, Australia, and their subsidy of the housing market is measurably lower than our own. So we aren't getting our money's worth." Mark Zandi, Chief Economist, Moody's Analytics

"For decades, America has been over-housed. We need a secular shift from housing to production of things. To that end, rental housing plays an important part. America should be well housed, but not necessarily 100% homeowners." Bill Gross, Co-founder and Co-chief Investment Officer, PIMCO

"Any changes in the housing finance system that fail to take these realities of the interdependency of housing policy goals and the needs of capital markets and housing finance systems [into consideration] could easily derail the progress of critically important assisted-housing programs, particularly rental housing programs."Michael A. Stegman, Director of Policy and Housing, John D. and Catherine T. MacArthur Foundation

Clearly there is a long road ahead, but we are encouraged that, at least for now, multifamily is clearly on the minds of the leaders engaged in the debate. We will continue to advocate on behalf of our industry as the debate develops. In the meantime, you can find out more about our advocacy efforts, including our recent comments to the Treasury Department, on our website here.