GSEs want to do more single-family rental financing

Fannie Mae and Freddie Mac will continue to pursue opportunities for the government-sponsored enterprises to provide liquidity to the single-family rental market, despite opposition from mortgage and real estate industry groups.

Supporting liquidity in both the homeowner rental channels creates more choices for consumers, executives from both companies said during a panel at the Mortgage Bankers Association's National Secondary Market Conference, ongoing this week in New York.

Fannie Mae's goal is to provide "affordable access to credit" to both the owner-occupied and single-family rental markets, said Executive Vice President Andrew Bon Salle.

"The borrower's going to have an option," he said, adding it's not Fannie's role to choose which option is appropriate for a consumer.

Fannie's recent SFR financing deal and speculation about similar activities at Freddie Mac suggest the GSEs may be doing more to back liquidity in the housing market beyond their traditional owner-occupied, single-family mortgage business. But critics have raised concerns about large single-family rental transactions making it more difficult for owner-occupants and smaller investors to compete for homes, particularly given current tight inventory levels of housing stock.

"The question [in terms of SFR's growth potential] is going to be what happens in the secondary market for this space," said Tim Reilly, president of Green River Capital, a subsidiary of Clayton Holdings and a vendor in the SFR market.

Freddie is supporting financing in both channels, said Freddie Mac Executive Vice President David Lowman. The decline in homeownership since the Great Recession may be appropriate, given the unsustainably high levels that were fueled by overly aggressive lending prior to the downturn, he said.

"We don't have a goal anywhere inside Freddie Mac to try to influence homeownership rates," he said, adding "renting is OK," given that many people aren't ready or don't want to own a home.