CREF Policy Update March 21: FHFA Holds First Multifamily Property Insurance Symposium

FHFA Holds First Multifamily Property Insurance Symposium

Last Wednesday, the Federal Housing Finance Agency (FHFA) hosted its first Multifamily Property Insurance Symposium, a meeting intended to promote more dialogue around the rising costs and limited availability of property insurance in the multifamily market.

• Discussions centered on the new reality of elevated insurance costs, challenges in availability (particularly for affordable housing), and possible solutions to help ease some of the burden of rising costs.

Why it matters: Property premiums in the U.S. increased 14% in the third quarter of 2023, the 24th consecutive quarter of premium increases. The increases are driven by continued losses, rising costs in reinsurance, and limited new capacity from insurers. However, even with higher premiums, insurance (and re-insurance) companies still face significant financial losses and thus have withdrawn many of their offerings in high-risk areas.

What’s next: MBA will prepare a more detailed summary, including next steps, and will share it with members in the coming weeks.

For more information, please contact Stephanie Milner at (202) 557-2747.

Biden Administration Releases FY 2025 Budget Request   

Last Monday, the Biden Administration released its Fiscal Year 2025 (FY25) budget proposal. The Budget requests $72.6 billion in discretionary budget authority for the Department of Housing and Urban Development (HUD), (a 0.95% decrease from what it proposed in FY 2024 but still well above the enacted level), including $32.8 billion for the Housing Choice Voucher program and $3 billion in competitive grants to reform eviction policies by providing access to legal counsel, emergency rental assistance, and other forms of rent relief.

• MBA’s summary of the budget is here.

Go deeper: The White House’s budget offers no specific recommendations related to the conservatorship status of Fannie Mae and Freddie Mac (the GSEs) other than encouraging them to continue building capital while meeting affordable housing objectives.

• On the tax policy front, the Administration proposes increasing the corporate tax rate to 28%, establishing a 25% minimum tax on those with wealth exceeding $100 million, imposing limits on tax deferral for 1031 “like-kind” exchanges, and various proposals intended to stimulate both affordable housing supply and accessibility.  

Why it matters: Each year, the President’s budget request, otherwise known as its “wish list,” provides a blueprint for the Administration’s priorities as Congress kicks off its appropriations process for the new fiscal year. The proposed budget is not expected to gain momentum in Congress, but is an opening salvo in tax and spending talks with Republicans.

What’s next: MBA will continue to work with the Administration and Congress on FY 2025 appropriations, with a focus on effective solutions that bolster housing supply, improve affordability for both renters and borrowers, improve access to sustainable homeownership, and lead to positive outcomes for members and their business.

For more information, please contact Stephanie Milner (202) 557-2747 or Megan Booth at (202) 557-2740.

Commercial and Multifamily Mortgage Debt Outstanding Increased in Fourth-Quarter 2023

The level of commercial and multifamily mortgage debt outstanding at the end of 2023 was $130 billion (2.8%) higher than at the end of 2022, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, released last week.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “The amount of commercial mortgage debt outstanding grew in the final quarter of 2023 and for the year as a whole. However, the increase was among the slowest paces since the mid-2010s. Every major capital source increased its mortgage holdings during the year. Mortgage originations were down by roughly 50% in 2023 compared to 2022, but that meant that few loans were paying off, helping maintain portfolio sizes even in the face of lower inflows.”

Go deeper: MBA’s report found that total mortgage debt outstanding rose by 0.9% ($41.8 billion) to $4.69 trillion in fourth-quarter 2023. Multifamily mortgage debt grew by $25.0 billion (1.2% ) to $2.09 trillion during the fourth quarter, and by $88.5 billion (4.4%) for the entire year.

Why it matters: Commercial banks continue to hold the largest share (38%) of commercial/multifamily mortgages at $1.8 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages at $1.0 trillion (21% of the total). Life insurance companies hold $733 billion (16%), and CMBS, CDO and other ABS issues hold $593 billion (13%).

For more information, please contact Jamie Woodwell at (202) 557-2936.

New York Senate and Assembly Pass One-House Budget Resolutions

Last week, both chambers of the New York Legislature introduced and approved their respective Fiscal Year 2025 state budget plans. The actions are largely symbolic but help facilitate deeper budget negotiations among the two chambers and Governor Kathy Hochul, who proposed her plan in January.

• The housing debate continues to center on the opposing views on whether the MBA-supported 421a tax exemption program for multifamily development should be extended/replaced with or without a new law establishing a “good cause” eviction standard and other tenant protections, which MBA does not support.

Go deeper: MBA and the New York MBA have written to Governor Hochul and Legislature urging enactment of the 421a program extension and other initiatives, and earlier this week the New York MBA met with key legislative leaders to explain the negative market impacts of passing the “good cause” eviction standard.

Why it matters: While the state is required to enact a final budget by April 1st, policymakers have missed that date in recent years and disagreements may drive a similar result this year.

What’s next: MBA will continue to work with the NYMBA and other industry partners to support member interests.

For more information, please contact William Kooper (202) 557-2737 or Stephanie Milner (202) 557-2747.

Register: MBA’s mPact Summit on April 4 in Texas

Meet us in Texas for a full day of career development and networking on Thursday, April 4, 2024.

Back by popular demand, this event is built by – and for – young professionals in the real estate industry who are focused on helping you get to the next level.

Why it matters: Event topics include developing leadership skills, learning how to navigate your career, and building and practicing networking skills. You don’t want to miss this opportunity.

What’s next: Register by March 29 to reserve your spot!

For more information, please contact Jacky Salazar at (202) 557-2746.

Upcoming MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – which are complimentary to MBA members:

The Intersection of Pricing Concessions and Fair Lending – April 4
Basics of Commercial Loan Closing and Loan Documentation – May 9
Introduction to Commercial Mortgage Backed Securities – May 23
Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – June 4

MBA members can register for any of the above events and view recent webinar recordings by clicking here.  

For any questions, please contacDavid Upbin at (202) 557-2931.