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Moody's Sees Finance Reform Provisions Negatively Impacting Home Prices

With Harp Nearing Expiration, Secure One Capital is Assisting Homeowners Struggling with Harp Refinancing Approval

nationalmortgageprofessional.com | April 17, 2014

Provisions in the comprehensive housing finance reform bill introduced by U.S. Sens. Tim Johnson and Mike Crapo will modestly dampen prices of multifamily properties and increase refinance risk, according to a new report by Moody’s Investors Service, Proposed Housing Finance Reform Will Be A Moderate Credit Negative for Multi-Family CMBS.

The Johnson-Crapo bill proposes replacing Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) responsible for securitizing single- and multi-family home loans, with a new and independent federal agency called the Federal Mortgage Insurance Corporation (FMIC). The bill also proposes creating a multi-family office within the FMIC that would insure mortgage-backed securities to facilitate the availability of multi-family loans.

“If this bill becomes law, higher loan coupons on the FMIC-backed share of debt will exert downward pressure on multifamily property prices and increase refinance risk, but the impact would be moderate,” said Tad Philipp, Moody’s director of Commercial Real Estate Research. “U.S. government backing for multi-family debt that had been implicit and free would become explicit and bear a guarantee fee. While GSE-backed multi-family debt often had pricing advantages relative to private market debt, loan spreads on FMIC-backed debt would more closely align with those of private market originators.”

Multi-family properties are a key component of US housing stock. Because Fannie Mae and Freddie Mac are the largest source of multi-family debt capital, the ultimate implementation of GSE reform and the smoothness of the transition are thus critical credit considerations, according to Moody’s.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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