News Type: Roundtable Weekly

Roundtable Joins Amicus Brief Urging SCOTUS to Address Constitutional Rights in Income-Producing Private Property

Posted on by Trey Jackson

The Roundtable joined the National Association of Home Builders (NAHB) and National Federation of Independent Business (NFIB) today, in an amicus brief requesting the nation’s highest court to accept a case that addresses significant property rights issues.

The Roundtable joined the National Association of Home Builders (NAHB) and National Federation of Independent Business (NFIB) today, in an amicus brief requesting the nation’s highest court to accept a case that addresses significant property rights issues.

  • In Love Terminal Partners, LP v. United States, developers and investors acquired rights to construct and provide flight service from a passenger terminal at Love Field airport near Dallas, Texas.  The venture never proved profitable.  The U.S. Congress subsequently codified a third-party agreement between affected cities, airlines, and the DFW airport regarding interstate air travel to and from the Dallas area.  The Love Terminal investors were not a party to that agreement, which gave the City of Dallas authority to demolish their terminal.  The agreement also provided the terminal could “never” be used for passenger service.
  • The Love Terminal owners thereafter sued the U.S. government for a Fifth Amendment property “taking” by effectuating the agreement in federal law.  At trial, the land owners won a $133.5 million “just compensation” award.  On appeal, however, the Federal Circuit reversed and entirely erased the trial court’s award.  The Love Terminal property owners thus requested the U.S. Supreme Court to hear the case.  The coalition supported that petition today with its amicus brief.
  • Prior Supreme Court precedents determine whether a taking has occurred under these circumstances. Penn Central (1978) considers the economic impact of land-use regulation, and whether the investor has reasonable investment expectations in the property.  Lucas (1992) establishes a “categorical” rule that a taking occurs when government regulations completely “wipe-out” the property’s economic uses.  “[T]his case presents an opportunity … to lay down the law—for the sake of consistency in both Penn Central and Lucas cases—when assessing fair market value for a property that is alleged to have prospective economic value for the buyer,” the brief explains.
  • Notably, the case addresses whether income producing property needs to turn a profit to support a takings claim. In deciding no taking occurred, the intermediate appeals court stressed that revenue never exceeded the owner’s carrying costs.  The amicus brief takes issue with that finding.  It states: “By that standard virtually all start-up companies and development projects would be vulnerable because it often takes years to begin turning a profit on a new venture …. [I]t is improper to ignore the economic realities driving business decisions to invest in a property that will prove profitable in the future.”
  • The brief continues: “Entrepreneurs and business investors typically have a long-term strategy, which assumes a return on investment over an extended period of time. This is especially true for home builders and commercial developers because they bear major upfront financial burdens before they can ever hope to turn a profit …. [I]t is simply wrong to say that negative cash-flow equates to zero value.  Negative cash-flow is commonly an accepted cost of doing business in the beginning of a new venture.”

The Supreme Court will decide whether (or not) it accepts the Love Terminal case likely after its next term starts in October 2019. If it does, briefing on the merits would take place next fall, and a decision would be expected by June 2020.   

Senators Introduce Bipartisan Legislation to Correct Cost Recovery Period for Nonresidential Real Estate Improvements

Posted on by Trey Jackson

This week U.S. Senators Pat Toomey (R-PA) and Doug Jones (D-AL) introduced bipartisan legislation, the Restoring Investment in Improvements Act (S. 803), to correct a mistake in the Tax Cuts and Jobs Act that lengthened the cost recovery period for qualified improvement property (QIP).  

U.S. Senators Pat Toomey (R-PA) and Doug Jones (D-AL) introduced bipartisan legislation, the Restoring Investment in Improvements Act (  S. 803  ), to correct a mistake in the Tax Cuts and Jobs Act that lengthened the cost recovery period for qualified improvement property (QIP).  

  • The unintended drafting error has resulted in a significantly longer 39- or 40-year cost recovery period for most improvements to the interior of nonresidential real estate.  The intent of Congress was to allow the immediate expensing of QIP – or provide a 20-year recovery period in the case of taxpayers electing out of new limitations on the deductibility of business interest.
  • Prior to the law’s enactment, commercial building tenants, retail store owners and restaurant owners could write off the costs of their renovations over a span of 15 years.  The legislation drafted by Sens. Toomey and Jones would allow many businesses to immediately deduct the full cost of interior renovations, and would apply retroactively to January 1, 2018. (The Hill, Mar. 14)
  • The Tax Cuts and Jobs Act included a strict new limitation on the deductibility of business interest expense, but also provided an exception for an “electing real property trade or business.”  In general, taxpayers that develop, rent, manage, or operate real estate are not subject to the interest limits, but are subject to longer cost recovery periods for their real estate and real estate improvements.  The Toomey-Jones bill would ensure that the QIP of an electing real property trade or business is depreciated over 20 years, rather than 40 years.   

  • Roundtable President and CEO Jeffrey D. DeBoer applauded the Senators bipartisan legislation introduced this week. “The Restoring Investment in Improvements Act ( S. 803 ) introduced by Senators Toomey and Jones is a simple and straightforward technical correction to the Tax Cuts and Jobs Act,” he said.

    “The Restoring Investment in Improvements Act (S. 803) introduced by Senators Toomey and Jones is a simple and straightforward technical correction to the Tax Cuts and Jobs Act.  An acknowledged drafting error significantly lengthened the depreciation period for building improvements.  This has caused a large increase in the after-tax costs of modernizing and altering buildings of all types and uses, from shopping centers to office buildings to industrial properties and restaurants.  The result is an immediate and unnecessary drag on building investment, construction activity, and job creation, said Roundtable President and CEO Jeffrey D. DeBoer.  “Congress should act quickly to pass this legislation and reinstate a much shorter cost recovery period for building improvements.”

  • In October 2018, the Roundtable along with 239 businesses and trade groups, wrote to Secretary Mnuchin urging the Treasury Department to provide taxpayers with administrative relief from the drafting error. (Roundtable Weekly, Oct. 12, 2018) 

On Thursday, Treasury Secretary Steven Mnuchin told reporters that he has discussed fixing technical errors in the 2017 tax law with congressional leaders on both sides. “This is something we’re very interested in doing. There’s a lot of demand,” he said following his testimony before the Senate Finance Committee. (Bloomberg, Mar. 14)

Business Coalition Urges Implementation Delay for FASB’s ‘Current Expected Credit Loss Accounting Standard’ (CECL), Pending Impact Analysis

Posted on by Trey Jackson

A business coalition that includes The Real Estate Roundtable on March 5 wrote to the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) to urge a delay in the implementation of the proposed Current Expected Credit Loss (CECL) accounting standard, which may begin to reduce aggregate bank lending as early as next year. (Coalition Letter, March 5)

The March 5 coalition letter cites a 2018 KPMB survey showing companies are struggling to make certain accounting, modeling and data decisions to be in compliance with CECL. (KPMG, Financial institutions feeling the crunch in countdown to CECL implementation)

  • The new CECL model will change the way banks calculate reserves on assets, requiring certain financial institutions to estimate the expected loss over the life of a loan beginning in January 2020.  For real estate, there is concern is that banks may reduce lending volumes as they build up additional capital reserves to be in compliance with CECL. 
  • The accounting rule change was issued by the Financial Accounting Standards Board (FASB) in June 2016 as a result of the 2008 financial crisis.
  • The regulatory change in how banks estimate losses in their allowance for loan and lease losses (ALLL) will require substantial changes in data analytics and financial methodologies.  The March 5 coalition letter cites a 2018 KPMB survey showing companies are struggling to make certain accounting, modeling and data decisions to be in compliance with CECL.  (KPMG, Financial institutions feeling the crunch in countdown to CECL implementation)
  • According to Trepp’s Looking at Historical CRE Losses for CECL, “To benchmark and fine-tune loss methodologies for CECL, the key for banks will be a four-letter word: data.  Unfortunately, many banks have very little in the way of granular historical data, and a number of those that do have good data have taken few to no losses in their history. This has made it difficult for those banks to effectively model future losses.”  (Trepp article by Joe McBride, April 21, 2017)
  • To avoid unintended economic consequences, the coalition states in its letter, “We believe it is important to delay implementation of CECL in order to allow for time to conduct a quantitative impact analysis and to consider potential alternatives, while allowing for post-issuance field testing. Time for further assessment will also allow regulators to better understand and address the key consequences of any proposal for capital and other regulatory purposes.”

The 8 signatories to the coalition letter are the U.S. Chamber of Commerce, American Bankers Association, Bank Policy Institute, The Real Estate Roundtable, Commercial Real Estate Finance Council, Mortgage Bankers Association, National Association of Realtors, Credit Union National Association and National Association of Federal Credit Unions.

House Ways and Means Committee Explores Funding for National Infrastructure Improvements

Posted on by Trey Jackson

The tax-writing House Ways and Means Committee held a hearing this week on the need to launch a national infrastructure improvement program and potential funding sources.  

The Joint Committee on Taxation issued an “Overview Of Selected Internal Revenue Code Provisions Relating To The Financing Of Public Infrastructure.”

    • Highway Trust Fund
    • Airport and Airway Trust Fund Excise Tax
    • Inland Waterways Trust Fund Excise Tax
    • Harbor Maintenance Trust Fund Excise Tax
    • Tax-Exempt Financing for Public Infrastructure; and
    • Public-Private Partnerships

The hearing covered the looming shortfall in the Highway Trust Fund and the viability of potential revenues sources – such as an increase in the gas tax and the imposition of a Vehicle Miles-Traveled fee– to help finance increased infrastructure spending.

House  Ways and Means Chairman Richard Neal (D-MA) said President Trump’s interest in “a massive infrastructure package,” shows Congress has “a real opportunity to work together and do something big here.”  (Chairman Neal statement, March 6)commercial real estate market. 
  • Ways and Means Chairman Richard Neal (D-MA) noted how “meaningful, sustained investments in our nation’s infrastructure” would create more jobs, encourage a more competitive business climate and revitalize local communities.  Neal also said President Trump’s interest in “a massive infrastructure package,” shows Congress has “a real opportunity to work together and do something big here.”  (Chairman Neal statement, March 6)
  • President Trump stated during his January State of the Union address, “I know that Congress is eager to pass an infrastructure bill. And I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting edge industries of the future. This is not an option, this is a necessity,” Trump said.  (Roundtable Weekly, Feb. 8)
  • The Roundtable’s 2019 Policy Agenda notes that every $1 billion spent on infrastructure creates an estimated 13,000 jobs.  “The quality of infrastructure systems—including transportation, utilities, and telecommunications—has been cited as the most important factor influencing real estate decisions around the world. The productivity of our cities, towns and workforce depend on systems that safely and reliably transport people, supply power, and share information across the built environment,” according to the report.   (The Roundtable’s 2019 Policy Agenda Infrastructure section.)

The Roundtable sent a comment letter to President Trump in Jan. 2018 offering specific suggestions on how innovative financing sources may be used to help pay for infrastructure improvements – and how restructuring a lengthy permitting process and cutting unnecessary red tape will help control project costs and delays. 

Roundtable Warns of Potential Economic Harm if New Duties are Imposed on Fabricated Structural Steel Imports

Posted on by Trey Jackson

The Commerce Department has initiated investigations into whether a key material used in major real estate and infrastructure projects – fabricated structural steel (FSS) from Canada, China and Mexico – is being sold in the U.S. for less than fair value.  (Commerce Department announcement, Feb. 26)

The Commerce Department has initiated investigations into whether a key material used in major real estate and infrastructure projects – fabricated structural steel (FSS) from Canada, China and Mexico – is being sold in the U.S. for less than fair value.

  • The Roundtable on March 4 wrote to the U.S. International Trade Commission (ITC) urging a cautious approach to the investigation, emphasizing the potential economic harm that new tariffs could cause.  Roundtable President and CEO Jeffrey DeBoer concludes in the letter that “… unless supported by conclusive evidence of unfair dumping or subsidies, I urge you to reject calls for new tariffs on U.S. imports of fabricated structural steel.”  (Roundtable comment letter, March 1)
  • The antidumping and countervailing duty investigations are based on petitions from the American Institute of Steel Construction.  If  Commerce and the ITC affirm that dumped and/or unfairly subsidized U.S. imports of fabricated structural steel from Canada, China, and Mexico are causing injury to the U.S. industry, punitive duties could be imposed on those imports.  (Reuters,  Feb. 26)
  • The Roundtable letter emphasizes the negative effects of FSS tariffs.  “New duties could have a chilling effect on job creation and productive investment, slowing economic growth and reducing employment in industries directly and indirectly affected by real estate development,” DeBoer states.
  • In 2017, imports of fabricated structural steel from Canada, China, and Mexico were valued, respectively, at an estimated $658.3 million, $841.7 million, and $406.6 million  (Commerce Department Fact Sheet).
  • Rising costs due to the shortage of skilled labor are currently putting pressure on new real estate development.  Steel prices in the United States also rose significantly after the imposition of 25 percent tariffs on many steel imports last March. (Roundtable Weekly, March 9, 2018)
  • The declining competitiveness of domestic steel fabricators could be attributed to the unfortunate downstream economic consequences of steel tariffs imposed last year – and may not reflect clear evidence of dumping or illegal subsidies.
  • As The Roundtable letter notes, “… there is significant cross-border integration and cooperation in the fabricated structural steel industry.  Foreign fabricators operate facilities in the United States, utilize U.S.-made steel in their finished products, and regularly form joint ventures with U.S. firms to take on large and complex projects.”
  • DeBoer also states, “… rather than spurring real estate and infrastructure developers to purchase fabricated steel from domestic sources, unjustified government intervention in the form of new duties may lead potential U.S. buyers to shelve projects that would create well-paying jobs and produce a lasting economic impact in communities.”

The ITC is scheduled to make its preliminary determinations by March 21, 2019.

 

Rural-Urban Coalition Supports Legislative Reforms for Stronger EB-5 Investment Program In Lieu of Inadequate Regulations

Posted on by Trey Jackson

Comprehensive legislative reforms to the EB-5 investment program are needed to provide stronger safeguards to combat fraud and safeguard national security while balancing rural and urban areas’ access to the program, according to a coalition of 11 national industry organizations. (Coalition letter, March 8)

A coalition of 11 national industry organizations recommends comprehensive legislative reforms to the EB-5 investment program are needed to provide stronger safeguards to combat fraud and safeguard national security while balancing rural and urban areas’ access to the program. (  Coalition letter  , March 8)

 

  • The coalition—in a letter sent today to the Office of Management and Budget’s (OMB) Director Mick Mulvaney—maintains that regulations proposed during the Obama era lack national security and anti-fraud provisions essential to overhaul the program.  These proposed regulations also do not provide for a “set aside” of EB-5 investment visas for projects in so-called “Targeted Employment Areas” – a key policy component of stakeholder negotiations to encourage fair access to EB-5 capital in urban, suburban, and rural communities.
  • The letter also recommends that EB-5 Targeted Employment Areas should overlap with Opportunity Zones designated by the Treasury Department in June 2018.  Both geographic designations are census tract-based and share the common objective to channel investment capital to the nation’s distressed communities.  “We cannot discern a sound policy basis to establish two different sets of census tract designation criteria to achieve the same policy objective,” the organizations wrote.
  • President Trump on December 12, 2018 signed an Executive Order directing all federal agencies (including OMB) to consider how their programs can enhance revitalization efforts in new Opportunity Zones.  (White House statement and  PBS Video, Dec. 12, 2018)
  • The coalition letter concludes that final publication of these rules by the Department of Homeland Security would undermine congressional efforts to improve and sustain the EB-5 program over the long term.  “Our organizations continue to believe that congressional action is the best way to achieve lasting reform,” the letter states.  

Sen. Tim Scott (R-SC) – who led the effort in Congress for enactment of the Opportunity Zones program – discussed its goals and incentives on Jan. 29 in a discussion with Roundtable member Geordy Johnson (CEO, Johnson Development Associates, Inc.) during The Roundtable’s State of the Industry Meeting (Roundtable Weekly, Feb. 15)

The Real Estate Roundtable Elects New Board and Committee Leadership for FY2017

Posted on by Trey Jackson

(WASHINGTON, D.C.) — At The Real Estate Roundtable’s Annual Meeting on June 14-15, members approved the organization’s leadership for their fiscal year beginning July 1, 2016. 

William C. Rudin (Rudin Management Company, Inc.) was elected to his second year as the organization’s chairman. Joining him on the Board of Directors, as of July 1, are: 

  • Brian Harnetiaux, Senior Vice President of Asset Management, McCarthy Cook & Co.
    Chair and Chief Elected Officer, Building Owners & Managers Association (BOMA) International
  • Elizabeth I. Holland, CEO/General Counsel, Abbell Associates
    Chairman, International Council of Shopping Centers
  • Jodie W. McLean, CEO, EDENS
  • Stephen P. Weisz, President and CEO, Marriot Vacations Worldwide Corporation
    Chairman of the Board, American Resort Development Association.

Stepping down from the Roundtable board are:  

  • Stephen D. Lebovitz, President and CEO, CBL & Associates Properties, Inc.
    Immediate Past Chairman, International Council of Shopping Centers
  • George M. Marcus, Chairman, Marcus & Millichap Company.

The full board list and committee leadership for FY 2017 can be found online at www.rer.org. 

For FY 2017, The Roundtable has added a Membership Committee to continue its efforts to maintain a balanced and diverse membership, co-chaired by Jeffrey B. Citrin (Managing Principal, Square Mile Capital Management LLC), and Anthony J. LoPinto (Global Sector Leader, Real Estate, Korn Ferry).

The Sustainability Policy Advisory Committee (SPAC) will continue to be led by Anthony E. Malkin (Chairman & CEO, Empire State Realty Trust), and Joyce S. Mihalik (Vice President, Design Services, Forest City Realty Trust) will serve as the new vice chair. 

The Real Estate Capital Policy Advisory Committee (RECPAC) will be co-chaired by Dennis Lopez (Global Chief  Investment Officer, AXA Real Estate Investment Managers), Mark Myers (Executive Vice President, Wells Fargo), and Diana Reid (Executive Vice President, PNC Bank) will serve as vice chair. 

The Research Committee will be chaired by Michael Bilerman (Managing Director, Citi Investment Research).

As for the Tax Policy Advisory Committee (TPAC), Frank G. Creamer, Jr. (Senior Advisor, Trimont Real Estate Advisors) will remain chair, and Jeffrey S. Clark (Senior Vice President, Global Tax and JV Accounting, Host Hotels & Resorts Inc.) will serve as vice chair. 

The Homeland Security Task Force (HSTF) leadership remains the same, with co-chairs Joseph Billy Jr. (Vice President/Global Security, Prudential), and J. Christopher Woiwode (Vice President, Security, Macerich). 

Roundtable Chairman William C. Rudin acknowledged the contributions of outgoing board members and our policy advisory committee leaders. “Thanks to the dedication, knowledge, and the leadership of our outgoing board and committee leaders, The Roundtable this past year made tremendous strides in all areas of our policy issues; the 6–year extension of the Terrorism Risk Insurance Act (TRIA), congressional authorization for the voluntary “Tenant Star” program, significant reforms of the Foreign Investment in Real Property Tax Act (FIRPTA), critical improvements to legislation affecting how large and small partnerships are audited for tax purposes, and efforts to reinvigorated the debate over how to authorize the collection of taxes owed for online purchases and goods.”

“We look forward to the new leadership’s valuable insights, along with years of industry experience, as we continue to work with our 17 national trade association partners to jointly address key national policy issues relating to real estate and the overall economy.” added Rudin. 

“The Roundtable had a terrific year, raising the industry profile in positive and substantive ways, and adding value to policy issue discussion throughout Washington. The industry leaders on our board of directors took our well-informed, fact-based organization to a new level of thoughtful analysis of policy proposals. Throughout the year we quickly responded to policy challenges and we proactively advanced our perspective on important issues,” said Roundtable President and CEO, Jeffrey D. DeBoer.

 

Real Estate Roundtable Commits Cooperation on Productive Policy Agenda with President-Elect Trump and New Congress

Posted on by Trey Jackson
(WASHINGTON, D.C.) — Real Estate Roundtable CEO and President Jeffrey D. DeBoer today committed to
working on a positive policy agenda with President-Elect Trump and the 115th Congress on compelling issues

affecting the nation’s economy, job creation and the health of commercial real estate markets.

“We look forward to working with President-Elect Trump and the 115th Congress to positively boost job creation, expand the economy, and address the many important national policy issues relating to real estate and the national economy.

Strong real estate markets provide millions of American jobs, improve the well being of our local communities, support the interests of national security and defense, and help sustain the nation’s critical infrastructure in our towns, cities, and states. 

The strength of real estate, and the benefits the industry provides to all Americans, depends on fair, consistent, and forward-looking policy at all levels of government. Real estate public policies are non partisan. They should be based on objective economic principles, responsive to changing economic cycles and sensitive to societal demands. 

Tax and financial regulatory reform; infrastructure investment; immigration issues; energy policy; and, physical and cyber security each will present opportunities to advance the economy job creation and the stability of U.S. real estate markets. 

We are excited to offer our support, expertise and assistance to President-Elect Trump and to the new Congress. We are honored to contribute meaningfully to the strength and prosperity of our nation,” said DeBoer.

About The Real Estate Roundtable

The Real Estate Roundtable brings together leaders of the nation’s publicly-held and privately owned real
estate ownership, development, lending and management firms with the leaders of national real estate trade associations to jointly address key national policy issues relating to real estate and the overall economy. Collectively, Roundtable members’ portfolios contain over 12 billion square feet of office, retail and industrial properties valued at more than $1 trillion; over 1.5 million apartment units; and in excess of 2.5 million hotel rooms. Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.

The Real Estate Roundtable Calls On Congress to Reform and Reauthorize EB-5 Investment Program by Sept. 30

Posted on by Trey Jackson
(Washington, D.C.) – Real Estate Roundtable President and CEO Jeffrey DeBoer today said congressional reauthorization of EB-5 “regional centers” needs to pass before the investment program expires on Sept. 30, and that the reauthorization should include measures to improve the program’s transparency and accountability along the lines of reforms outlined in an August 12 report by the U.S. Government Accountability Office:
 
“The Real Estate Roundtable strongly supports the EB-5 program. It provides unique gap financing for large and small projects across the nation and creates American jobs at no cost to taxpayers.  Congress should extend EB-5 regional centers before they expire on September 30, 2015, and at the same time make needed reforms to improve the integrity, administration and transparency of the program.  
 
“The August 12 Government Accountability Office report provides a blueprint to rally Congress into action after Labor Day.  The report outlines reforms to improve the decades-old EB-5 program that will continue to meet the overriding objectives of job creation and economic growth. This GAO report responds to bipartisan congressional requests to review and comment on the program. The report focuses on measures to safeguard national security, deter evolving risks of investor fraud, and clarify accepted government methodologies to show job creation.  Its findings are commendable and pending bipartisan bills presently address these identified concerns. This report can now be the catalyst that points the way toward reform and multi-year reauthorization by Congress.
  
“An estimated 136,000 American jobs – and nearly $7 billion in foreign investment dollars – could be forfeited if Congress fails to act.  Since the early 1990s, these regional centers have directed capital to help finance development projects and have always been reauthorized by wide bipartisan margins.  From 2005-2013, EB-5 brought in a minimum of $5.2 billion in private investment to the U.S. – with a minimum of $1.6 billion in 2013 alone.  
    
“Smart government policies are critical to enable America to compete in the global marketplace to attract foreign investment dollars – and put Americans to work – in rebuilding infrastructure, modernizing buildings, and developing resilient 21st century communities where we live, work, and play.  Businesses, local economic development agencies, and other key stakeholders should not wait.  They should now urge their Senators and Representatives to act swiftly
 
 

Industry Coalition Promotes GSE Reform Principles; Senate Banking Committee Advances New FHFA Director

Posted on by Trey Jackson

The Real Estate Roundtable and 27 other industry organizations today submitted principles for reforming the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, which underpin the multi-trillion-dollar financial market for single-family and multifamily mortgages. (GSE Reform Coalition letter, March 1)

The Real Estate Roundtable and 27 other industry organizations today submitted principles for reforming the Government-Sponsored Enterprises (GSEs). 
  • “We believe that comprehensive legislative reform, including an end of conservatorship, is ultimately necessary in order to codify structural changes that ensure safety and soundness and provide the certainty needed for private capital to establish a more reliable presence in housing finance,” according to the comments.
  • The letter emphasized that compelling evidence must show the private market is capable of an expanded role before efforts are made to reduce the GSEs’ current housing finance footprint. “Ultimately, we believe any reform, be it administrative or legislative, must seek to further two key objectives: 1) preserving what works in the current system, while 2) maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors, or taxpayers.”    
  • Fannie and Freddie recently announced they will pay a combined $4.7 billion in dividends to the U.S. Treasury Department.  The government took control of the two GSEs in September 2008 during the financial crisis.  (Reuters, Feb. 14)
  • The GSE coalition reform principles were sent to Acting Federal Housing Finance Agency (FHFA) Director Joseph Otting and Washington policymakers days after the Senate Banking Committee advanced the nomination of Mark Calabria as FHFA Director.  Calabria, currently chief economist to Vice President Mike Pence, would lead the agency that oversees the GSEs.  A vote to approve Calabria now moves to the full Senate, where it is expected to pass. (Housing Wire, Feb. 26 and Senate Banking Committee nomination hearing, Feb. 14) 
  • The coalition states in today’s letter that FHFA should establish policies that ensure a continuation or expansion of: 

    The  coalition states that FHFA should establish certain policies to support the continuation or expansion of a robust housing market.

     

    • A liquid national market with broad and fairly-priced access to affordable credit and improved infrastructure for the single-family secondary market;
    • Support for strong and sustained liquidity in the multifamily rental market;
    • Equal secondary market access and pricing for all lenders, regardless of size or volume; and
    • The sustainable transfer of appropriate credit risk to the private sector. 
  • The letter also advocates that principles governing any potential administrative reforms to the GSEs should be guided by the potential impact on borrowers, taxpayers, and market structure dynamics.  Any reform that would meaningfully alter the GSEs’ market presence-single-family, multifamily, or both-should also seek to maintain and enhance the stability and liquidity of the housing finance system.  (GSE Reform Coalition letter, March 1) 
  • Roundtable President and CEO Jeffrey DeBoer added, “Housing finance reform should support the GSE’s overall mission-ensure Americans across a broad range of income levels have access to a diverse supply of housing.” 

Senate Banking Committee Chairman Mike Crapo (R-ID) on Feb. 1 released an outline for reforming the nation’s housing finance system, including the GSEs. (Crapo Statement and Housing Reform Outline, Feb. 1 / Roundtable Weekly, Feb. 8)