Group Argues for Federal Guarantee in Multifamily Market

With about one-third of the American population residing in rental housing with climbing rents even despite largely stagnant incomes, the ""Center for American Progress (CAP)"":http://www.americanprogress.org/ argues for continued participation of the federal government in the multifamily housing market.

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Specifically, the organization supports a federal guarantee on multifamily mortgages.

CAP says the Federal Housing Finance Agency ""appears poised to pursue plans to privatize the multifamily mortgage market."" However, CAP says doing so would ""be a big mistake.""

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The 100 million American families in rental housing have experienced a 4 percent increase in rents this year, and the National Association of Realtors expects another 4.6 percent rise next year, followed by 4 percent increases in over both of the next two years.

CAP suggests without the support of Fannie Mae and Freddie Mac, rents would have risen even more sharply over the past few years.

""Without the availability of government-backed capital from Fannie Mae and Freddie Mac, as well as loans insured through the Federal Housing Administration, the entire rental finance market would have ground to a halt in the early years of the financial crisis,"" CAP stated in a recent ""report."":http://www.americanprogress.org/issues/housing/report/2012/12/10/47408/the-housing-market-is-not-only-for-homeowners/

CAP believes the answer to today's rental market struggles lies in a ""limited guarantee on certain multifamily mortgage-backed securities issued by private firms, provided that the underlying loans meet strict underwriting, loan-type, and size requirements.""

Additionally, according to CAP's plan, 51 percent of rental properties financed by the government would be required to be ""affordable,"" which CAP defines as rent levels lower than 30 percent of the income of individuals with incomes of or lower than 80 percent of local median income.