“The stage is set for housing finance reform,” Walker & Dunlop says in its third-quarter Multifamily Outlook report, which maintains a long-term positive outlook for the market.

Having worked closely with industry groups and the Federal Housing Finance Agency prior to the release of the Treasury Department’s reform plan in September, the lender has some concrete ideas for the administration and Congress on how to implement that reform effectively.

One is to increase private capital participation in risk-sharing with the GSEs. “The administration’s plan asserts that Fannie Mae and Freddie Mac’s footprint has become too large and they have too much market share, crowding out private capital,” according to the Multifamily Outlook. “In fact, private capital already takes the first-loss position in every multifamily mortgage originated by Fannie Mae or Freddie Mac.

“So instead of focusing on GSE market share and capping their business, why not invite more private capital into the risk-sharing position on loans?” the report suggests.

Among the nation’s largest lenders in the affordable housing space, Walker & Dunlop supports the administration’s focus on creating new supply in this sector—but not at the expense of the GSEs’ market-rate lending. “Narrowing their scope could have a perverse effect and jeopardize their effectiveness in creating affordable housing,” the report says.

This section of Walker & Dunlop’s Multifamily Outlook report also considers the long-term future of green financing and discusses other next steps that can be taken to advance housing finance reform. The report also delves into multifamily market fundamentals and features an interview with Real Estate Roundtable CEO Jeffrey DeBoer.

Pictured: Walker & Dunlop CEO Willy Walker.

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