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In this Issue
 FHFA Conservator of GSEs
Associations' Take on FHFA Takeover
Condo/Co-op Collapse Impacts Multifamily
Permits
FHFA Conservator of GSEs
As of Sept. 7, the Federal Housing Finance Agency
(FHFA) is conservator of both government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The Agency,
however, has stated that business for both single-family and
multifamily will continue as usual at the Enterprises during this
time.
According to FHFA's
Statement Regarding Contracts of Enterprises in Conservatorship,
"the conservatorship does not affect
existing contracts, or the authority of the Enterprises to enter
into new contracts, nor their enforceability."
In its statement, FHFA recognizes the importance
of all aspects of the Enterprises' multifamily businesses-including
the LIHTC (low-income housing tax credit) area and liquidity
facilities for remarketed mortgage revenue bonds - for a healthy
secondary market and housing affordability. In particular, support
for multifamily housing finance is central to the Enterprises'
public purpose.
As conservator, FHFA expects each Enterprise to continue
underwriting and financing sound multifamily business. We also do
not expect either company to liquidate its portfolio of LIHTC or
mortgage-revenue bonds. FHFA will only intervene when there is a
question of unsafe and unsound business practice that would have a
negative impact on an Enterprise's
financial position and is outside of the normal course of business.
Under these unusual circumstances, both Enterprises would first
seek advice and guidance from FHFA before proceeding further as
they deem appropriate.
Click
to read more
For more
information, go to www.ofheo.gov
and www.nmhc.org.
Associations' Take on FHFA Takeover
The National Multi Housing Council (NMHC) is
stressing the importance of allowing the GSEs
to hold multifamily mortgages they purchase in their retained
portfolios, given the rescue plan's heavy emphasis on
securitization. NMHC has explained to the regulators that a
"one size fits all" approach to GSE programs could have
seriously negative consequences for multifamily lending and
financing.
NMHC has noted that maintaining the agencies'
ability to do portfolio executions will not adversely affect their
soundness since multifamily loans represent a small portion (less
than 12 percent) of the GSEs' total
on-balance sheet holdings and their delinquency rates are a
fraction of the delinquencies in the single-family market.
The 60-day-plus delinquency rate on multifamily loans held or
insured by the agencies is 0.11 for Fannie Mae and 0.03 percent for
Freddie Mac.
"The impact of the Treasury Department plan
on the apartment sector remains to be seen as the details are
worked out, but we are optimistic that there will be little to no
disruption in the companies' multifamily operations," stated
Doug Bibby, president of NMHC. "The
government action is directly related to the companies'
single-family investments and their efforts to weather the ongoing
decline in that sector. The multifamily sector, on the other
hand, remains strong and is actually producing profits for the
firms that are helping rebuild their capital reserves. As a
result, we expect them to remain active in the multifamily
market."
The National Association of Home Builders (NAHB)
also pledged its support of this endeavor and will work with
policymakers to help their ongoing efforts to restore the financial
health of the GSEs.
Click
to read more
For more
information, go to www.nmhc.org
and www.nahb.org.
Condo/Co-op Collapse Impacts Multifamily
Permits
The National Apartment Association (NAA) reports
that multifamily housing construction remains mixed among
metropolitan area as the disarray in the for-sale housing market
continues. Nationally, multifamily construction permits dropped 9.1
percent over the first half of 2008. This follows the 10.1 percent
decline registered over the same period in 2007. Declines in
multifamily housing construction came primarily from the
condominium/cooperative component.
The U.S. Census Bureau does not categorize its
multifamily housing permits breakdown by rental and condo/co-ops at
metropolitan area levels. The Bureau does follow-up surveys of
individual permits to provide a breakdown of starts and completions
for rentals and condo/co-ops nationally and the four census
regions. Data for the first half of 2008 shows a 48 percent
increase in rental starts and a 33 percent drop in condo/co-ops.
Multifamily permits in all metro areas combined
declined by 9 percent in the first half, but rose 3.8 percent in
the 50 most active metro areas. Increases occurred in 32 areas and
18 experienced drops. Six of the 10 most-active markets from the
first half of last year saw considerable drops in permits this
year. They include: Atlanta down
4,083 units a loss of 49.7percent; Miami-Fort Lauderdale-Miami
Beach, -43.9% (-2,111 units); Chicago, -40.1% (-, 631
units); Phoenix-Mesa-.Scottsdale, -31.6% (-1,798 units); Houston,
28.5% (-3,061 units; and, Los Angeles-Long Beach,
-25.6% (-2,272 units). All of these drops are largely attributed to
the condo/co-op market collapse.
Click
to read more
For more information, go to www.naahq.org.
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