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| E.J. Burke |
WASHINGTON, D.C. (Oct.
9, 2013) – E.J. Burke, Chairman-Elect of the Mortgage Bankers
Association (MBA), testified today before the U.S. Senate Committee on Banking,
Housing and Urban Affairs at a hearing titled “Housing Finance Reform: Essential Elements of the Multifamily
Housing Finance System.”
Below is a copy of Mr. Burke’s oral testimony, as prepared
for delivery.
"The
multifamily rental housing market is a critical component of our housing system
— in size, reach and the households that it serves. More than one in three American households rent their home, and
more than 16 million of those households live in multifamily rental housing.
"Renters include workers who want to live near their
jobs, retirees on a fixed income, families with children, students, and
households who value the convenience and mobility that renting offers.
"A large and diverse group of capital sources currently
provide liquidity for multifamily housing, and that diversification continues
to increase. Private capital also bears significant risk in existing GSE
multifamily finance platforms.
“ The government-backed sources have experienced, even
through the recent financial crisis, very strong credit performance.
Importantly, as the recent economic downturn demonstrated, the counter cyclical
role is one that only the government can fulfill.
"With Fannie
Mae and Freddie Mac’s conservatorship going on more than five years,
policymakers must develop a long-term plan for the future role of the federal
government in the mortgage market. This plan must address the GSEs’ unique role
in multifamily rental housing.
“It is clear that the current state of the GSEs should not
last indefinitely. However, policy makers
should ensure the ongoing stewardship of valuable resources that support the
multifamily market and utilize them to transition to a stronger housing finance
system.
"As the
Committee considers the structure of the multifamily housing finance system, we
believe that policy makers should focus on ensuring the availability of capital
in all market cycles.
“MBA believes that public policy should strike a balance
that continues to attract and deploy private capital in the multifamily market,
while establishing a focused government guarantee that enables liquidity and
stability in all markets and all economic cycles.
"Bearing this
in mind, MBA believes that a new system should incorporate several structural
recommendations, which I describe in more detail in my written testimony:
"First, a
wholly-owned government corporation should function as a catastrophic
guarantor, administrator of a risk insurance fund, and regulator of secondary
market entities. This guarantor would be funded by guarantee fees paid by
issuers.
"The new system
should also allow multiple, privately-capitalized issuers of
government-guaranteed securities in the secondary multifamily mortgage market.
"Next, the
GSEs’ existing multifamily assets and infrastructure should be preserved and
carried over to a new system. Not only
are these businesses valuable to U.S. taxpayers, transferring them to new
entities would minimize market disruption and allow them to continue to serve
the multifamily housing finance market.
"Finally, we
firmly believe that proposed approaches should also be reasonable, flexible,
and balanced with regard to the need to attract private capital.
"For example, policy proposals contemplating
affordability requirements should take into account that 93 percent of
multifamily units have rents affordable to households earning area median
incomes or less.
"We are
encouraged by recent legislative activity that has revived the policy debate on
the future of Fannie Mae and Freddie Mac, and commend the efforts of the
Chairman and Ranking Member, and those on this committee who have introduced
thoughtful proposals that would create a comprehensive framework for the future
of housing finance.
For a complete copy of the company’s news release, please
contact:
Shawn Ryan
(202) 557-2727
