Multifamily housing finance reform: Eliminating the federal guarantee
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About This Event

 

 

 

 

 

 

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.

Agenda

8:15 AM
Registration and Breakfast

8:30 AM
Keynote Address
Rep. Randy Neugebauer, Chairman of the Housing and Insurance Subcommittee of the House Financial Services Committee

9:00 AM
Panelists:
Thomas White, Seachange Consulting Group
Charlie Wilkins, Compass Group

Discussants:
Peter Donovan, CBRE
Thomas Kim, Mortgage Bankers Association
Jim Lockhart, WL Ross & Co.

 Moderator:
Edward J. Pinto, AEI

10:45 AM
Adjournment

Event Contact Information

For more information, please contact Emily Rapp at [email protected], 202.419.5212.

Media Contact Information

For media inquiries, please contact [email protected], 202.862.5829.

Peter Donovan, a 32-year veteran of the financial services and multihousing industries, joined CBRE in November 2006 and leads the CBRE Capital Markets service line as senior managing director of the Multi-Housing Group. In his role, Donovan oversees both debt and equity originations and multihousing investment sales for CBRE throughout the United States. Donovan was previously the CEO of Deutsche Bank Berkshire Mortgage, steering that firm to a market-leading position in government-sponsored multifamily loans. Under Donovan, Deutsche Bank Berkshire Mortgage’s servicing portfolio totaled more than $18 billion — virtually all of it in Fannie Mae, Freddie Mac, Federal Housing Administration, and affordable housing loans — and the firm originated more than $4 billion in loans annually. Before that, he was chairman and CEO of Berkshire Mortgage Finance, where he directed the firm’s production, servicing, and asset management activities. Donovan is the recent past chairman of the National Multi-Housing Council and is a member of the Urban Land Institute. He is a past chairman and member of the Fannie Mae Advisory Council, as well as a recipient of the Fannie Mae Larry Dale Lifetime Achievement Award. He is also a past member of the commercial board of governors of the Mortgage Bankers Association.

Thomas Kim is senior vice president of commercial and multifamily policy at the Mortgage Bankers Association (MBA).  Kim leads public policy activities with regard to commercial and multifamily real estate finance at MBA, including matters relating to financial services regulation, multifamily housing finance, portfolio lending, and commercial mortgage securitization. Before joining MBA, he served in a variety of legal, regulatory, and policy roles, including at Freddie Mac and the Investment Company Institute. Kim is also a cofounder and board member of a nonprofit organization that combats human trafficking and promotes economic development in developing countries. 

Jim Lockhart is vice chairman of WL Ross & Co. LLC and a member of the Office of the Chairman and Investment Committees for the WLR Recovery Funds and Invesco Mortgage Recovery Fund. Before joining WL Ross in September 2009, he was the director of the Federal Housing Finance Agency (FHFA); regulator of Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks; and its predecessor agency, the Office of Federal Housing Enterprise Oversight.  He served as the chairman of the Federal Housing Finance Oversight Board and was a member of the Financial Stability Oversight Board.  Lockhart has also served as the deputy commissioner and chief operating officer of the Social Security Administration and as secretary to the Social Security Board of Trustees. He was a member of former president George W. Bush’s management council.  Lockhart cofounded and served as managing director of NetRisk Inc., a risk management software and consulting firm serving major financial institutions, banks, insurance companies, and investment management firms worldwide. He has also held senior positions at National Reinsurance, Smith Barney, Alexander & Alexander, and Gulf Oil in Europe and the US. He is a director of Virgin Money in the UK, Bank of the Cascades, Berkeley Point Capital, Capital Markets Cooperative, Situs Holdings, and the American Securitization Forum.

Rep. Randy Neugebauer represents the Texas’s 19th Congressional District, which stretches across 27 counties. As one of the most conservative members of Congress, Neugebauer is a strong advocate for fiscal discipline, limited government, a strong national defense, and the preservation of traditional Texas values in Washington. Neugebauer serves on three committees in the US House of Representatives. He is a senior member of the House Agriculture Committee and the House Science, Space, and Technology Committee.  Additionally, he serves as the chairman of the House Financial Services Subcommittee on Housing and Insurance. In this role, he is working to reduce the government footprint in the economy, cut regulatory burdens, and shift risk away from American taxpayers and back into the private sector, which understands how to price risk.  With taxpayers now backing about 90 percent of all mortgages, Neugebauer is committed to reforming housing finance so that the US housing markets are more efficient. He brings a unique perspective to his role as subcommittee chairman because of his years of practical experience in the business world.  Before his service in Congress, Neugebauer ran his own small business, which focused on residential construction and real-estate development in Lubbock, Texas. He was at the forefront of the establishment of the Ports-to-Plains Trade Corridor Coalition and served as the president of both the West Texas Home Builders and the Texas Association of Builders.

Edward J. Pinto, an executive vice president and chief credit officer for Fannie Mae until the late 1980s, has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. In particular, his data have revealed striking facts about the contributions of housing policy to the mortgage crisis. Two of his major research papers, "Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study" and "Triggers of the Financial Crisis," were submitted to the Financial Crisis Inquiry Commission. At AEI, Pinto is continuing his work on the role of housing policies in the financial crisis and researching policy considerations and options for rebuilding America’s housing-finance sector.

Thomas White most recently served as a trustee of Centerline Capital, a debt and equity investor in multifamily housing properties, and of Enterprise Investments, the for-profit arm of Enterprise Partnerships. He retired from both boards in 2012 after over a decade of service. Previously, he was senior vice president at Fannie Mae, responsible for all Fannie debt and equity investments for multifamily properties, including the Delegated Underwriting and Servicing program. White was also executive vice president of the National Council of State Housing Agencies; held senior positions at the US Department for Housing and Urban Development, Bear Stearns, and the Michigan State Housing Development Authority; and codirected a major study of the US Department of Agriculture multifamily programs. Early in his career, White was a social worker, a community organizer for the city of Detroit, and a state legislator representing downtown Detroit.

Charlie Wilkins is a consultant who works with regulatory agencies, owners, managers, and lenders regarding affordable housing policy, finance, asset management, and property management. He is an adviser to the US Department for Housing and Urban Development’s (HUD) Mark to Market, Green Retrofit, HOME, and Neighborhood Stabilization programs and to the State of Louisiana’s hurricane recovery program. He formerly advised the US Department of Agriculture’s Rural Housing Service. As a senior executive with the National Housing Partnership (NHP), Wilkins was responsible for the asset management of NHP’s 60,000 units of affordable housing and its relationships with the US Congress and HUD. He is a senior fellow in the School of Public Affairs at the University of Maryland, a past president of the National Affordable Housing Management Association, and a board member of the National Center for Healthy Housing.

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