Multifamily housing finance reform: Eliminating the federal guarantee

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Event Summary

Presenting the findings of their recent white paper titled, "Moving toward a Viable Multifamily Debt Market with No Ongoing Federal Guarantee," Thomas White of the Seachange Consulting Group and Charlie Wilkins of the Compass Group outlined a five-year plan for ending the federal guarantee in multifamily housing. Both authors stressed the vulnerability of the current system to political manipulation and interest-rate shifts. This view was reiterated by keynote speaker Rep. Randy Neugebauer, who also highlighted the cost of the Federal guarantee.

While discussants collectively expressed the need for multifamily housing reform, they disagreed on the role the guarantee should play in the market. Peter Donovan of CBRE argued that government involvement has created market discipline, which resulted in low default rates relative to single-family and commercial mortgages. Thomas Kim of the Mortgage Bankers Association suggested that private capital was already present in the market through investment in government-sponsored-enterprise securities and direct lending. Jim Lockhart of WL Ross & Co. concluded that the government share of multifamily housing mortgages needs to be scaled back, but should continue to play a countercyclical role.
--Andre Gardiner

Event Description

Commercial real-estate asset classes such as office and industrial buildings, shopping centers, and hotels have no federal guarantee. Yet, since the early 2000s, Fannie Mae and Freddie Mac (with their formerly implicit and now explicit federal guarantee) have dominated multifamily lending, which used to be dominated by private lenders. Moreover, during that same period, there was an explosion of multifamily debt, which indicated that the multifamily sector may have been overleveraged. At this event, industry experts Tom White and Charlie Wilkins will argue that the federal guarantee should be phased out and will present findings from their interviews with a host of multifamily and capital-markets experts.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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About the Author

 

Charles S.
Wilkins
  • American Enterprise Institute (AEI) adjunct scholar Charles Wilkins is an affordable housing expert. As a principal of the Compass Group LLC, he advises governmental and private clients in rental housing policy, including rental housing finance and project and loan performance. At AEI, his work focuses on multifamily housing policy and finance.


    Earlier, Wilkins worked for the National Housing Partnership. He is the author or coauthor of four books that were published or co-published by the Compass Group LLC: “Managing Occupancy: A Companion Guide to HUD’s Occupancy Handbook” (2004), “Fair Housing: A Guidebook for Owners and Managers of Apartments” (2000), “Shelter From The Storm: Successful Market Conversions of Regulated Housing” (1998), and “Managing Housing Credit Apartments: A Question & Answer Handbook for Property Owners and Managers” (1998).


    Wilkins has a B.A. from the University of North Carolina at Chapel Hill.

  • Phone: 703.217.8394
    Email: cwilkins@compassgroup.net
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: Emily.Rapp@aei.org

 

Thomas W.
White
  • Tom White is an adjunct fellow at the American Enterprise Institute (AEI). An expert in housing policy, White has public service and technical experience in the financing, building, and managing of multifamily and single family housing. At AEI, he continues his work in housing policy, including housing finance and affordable housing.

    Early in his career, White served as a Michigan State legislator (11th District). He went on to work for the Michigan State Housing Agency where he oversaw the development (construction lending) and financing of single-family and multifamily housing. Later, at the US Department of Housing and Urban Development, he was in charge of bond finance and state agency programs for housing policy. White has also worked in senior positions at the National Council of State Housing Agencies, at Bear Stearns Investment Bank, and at Fannie Mae until his retirement in 2001. Since then, he has been a trustee of Center Line Capital, which specializes in multifamily finance and equity investments.

    White has a B.A. in history from Wayne State University. He has also done postgraduate work in sociology.

  • Email: twhite518@gmail.com
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: Emily.Rapp@aei.org

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org

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