Multifamily and Commercial Mortgages: An Overview of Issues (CRS Report for Congress)
Premium Purchase PDF for $24.95 (19 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Jan. 23, 2014 |
| Report Number |
R41046 |
| Report Type |
Report |
| Authors |
N. Eric Weiss, Specialist in Financial Economics |
| Source Agency |
Congressional Research Service |
Summary:
As the recovery from the recession of December 2007-June 2009 continues, congressional interest in multifamily and commercial mortgages has shifted from worries about the immediate impact of foreclosures to consideration of the future of mortgage finance. During the recession, losses on mortgages raised concerns about the risk to tax payers through Federal Deposit Insurance Corporation (FDIC) insurance, which is backed by the full faith and credit of the federal government. Significant parts of these losses occurred due to commercial loans at smaller insured depositories. The federal government has invested more than $187 billion in Fannie Mae and Freddie Mac, which guarantee single-family and multifamily mortgages. Although Fannie Mae and Freddie Mac do not have explicit full faith and credit backing from the federal government, they do have a legal agreement that would provide additional government funds, if needed.
Congressional interest in mortgage reform, including multifamily mortgages, is reflected in several bills that have been introduced. In the House, only H.R. 2767, the Protecting American Taxpayers and Homeowners Act of 2013 (PATH Act), has been ordered to be reported by the Financial Services Committee. In the Senate, hearings have been held on S. 1217, commonly referred to as the Corker-Warner bill. Both would wind down Fannie Mae and Freddie Mac, which have been key sources of multifamily finance. (Fannie Mae and Freddie Mac are prohibited by their congressional charters from activities not directly related to single-family and multifamily mortgages and have not been involved in commercial lending.) The PATH Act makes no mention of multifamily housing finance. Corker-Warner would create a new entity, the Federal Mortgage Insurance Corporation (FMIC), which would take over Fannie Mae's and Freddie Mac's role in multifamily finance.
The PATH Act would greatly reduce the government's role in the mortgage system whereas the Corker-Warner bill would reshape the government's role.
This report is an overview of multifamily and commercial mortgage issues that may be of interest to Congress. It compares multifamily and commercial mortgages to the more familiar single-family mortgages. For an analysis of legislation, see CRS Report R43219, Selected Legislative Proposals to Reform the Housing Finance System, by Sean M. Hoskins, N. Eric Weiss, and Katie Jones.
