The American Bankers Association supports a proposal to have Fannie Mae and Freddie Mac switch the methodology for how they measure their multifamily housing goals, the association said today in a letter to the Federal Housing Finance Agency. The agency in August proposed that both GSEs switch from using the number of units in multifamily properties financed annually by each institution to the percentage of units financed. In its letter, ABA noted that the proposed change came in response to previous comments from both the association and advocates who said a percent-based benchmark better reflects changes to the market than a fixed numerical goal.
“Further, in a rapidly changing economic environment where rising interest rates and an acute shortage of affordable housing threatens to become chronic, a benchmark that is more reflective of changing conditions is both welcome and warranted,” ABA said.
ABA added that it appreciates FHFA’s acknowledgment of Fannie Mae’s and Freddie Mac’s potential to crowd out private market investors to the detriment of the long-term affordable multifamily market. “Shifting to a benchmark more reflective of changing market conditions should help to alleviate some of those concerns. Previous hard-and-fast numerical goals encouraged crowding out as the enterprises’ adjusted terms in order to meet their goals, sometimes to the detriment and discouragement of further engagement by private market participants in the development of affordable multifamily properties,” the association said.
