How Privatizing GSEs Could Impact the Multifamily Market
On Friday, Feb. 1, 2019, Senate Banking Committee Chairman Mike Crapo released a proposal to reform the GSEs Fannie Mae and Freddie Mac by privatizing them. This is not the first time a proposal for GSE reform has been made, with the latest discussions taking place just last summer. According to American Banker, in June, the White House proposed a reform plan that would repeal the federal charter of the GSEs and end its conservatorship. Later in September, another proposition was put forward, this time suggesting to eliminate Fannie Mae and Freddie Mac altogether, and instead utilizing Ginnie Mae as a government backstop.
“This is going to be an amazing challenge. If Congress decides to privatize the GSEs, who will take on the counterparty risk for the government? Opportunities will be lost in getting these types of loans. Both Fannie Mae and Freddie Mac are giving the government in total around $9 billion quarterly,” Richard Katzenstein, senior vice president & national director, Marcus & Millichap Capital Corp., told Multi-Housing News.