The government-owned companies Fannie Mae and Freddie Mac is moving ahead with their plans to scale back their financing of apartment-building loans sometime next year, recoiling what opponents describe as a significant support for rental housing.
Although the extent of the cuts is yet not decided, the companies will add to a 10 percent decrease in apartment financing the Federal Housing Finance Agency required Fannie Mae and Freddie Mac to make this year as part of a broader attempt to increase private investment in housing finance.
Lenders, developers, and affordable-housing advocates are pushing back, stating the move could disagree with rural areas and smaller cities such as Boise, Idaho, and Topeka, Kansas, of rental housing that private investors may disregard. Dozens responded to a recent FHFA request for suggestions with the same message: Don't do it at all.
E. J. Burke, chairman of the Mortgage Bankers Association and an executive vice president at Cleveland-based KeyBank, articulated in an interview, "Without Fannie and Freddie our ability to get deals done in smaller towns would be greatly reduced," "We haven't seen that impact yet, but down the line I'm very concerned if the conservator continues to cut their volumes."
From the time since the financial crisis, the companies' multifamily portfolio has provided steady profits. Before taxes this year, Fannie Mae earned $1.4 billion through Sept. 30 on its apartment business and Freddie Mac (FMCC: US)earned (FMCC: US) $1.8 billion.
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