Industry Hopes GSE Portfolio Caps Will Ease

(Read more on the debt and equity markets and the multifamily market .)

WASHINGTON, DC-Multifamily investors and developers were disappointed late Friday afternoon when James Lockhart, the director of the Office of Federal Housing Enterprise Oversight, announced he had decided not to increase the portfolio caps for Fannie Mae and Freddie Mac. That has not stopped industry representatives from urging the regulatory body to rethink its decision. In a joint letter released at close of business on Monday, the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors explained to OFHEO why temporarily increasing the caps on the investment portfolios of Fannie Mae and Freddie Mac may well help to defuse the growing debt crisis.

“The nation’s mortgage markets are facing a liquidity crisis of a force and magnitude not seen in decades,” it read. “The chill will have far reaching effects throughout the housing market if stability is not restored. A temporary increase in the allowable size of the GSEs’ loan portfolios for the purpose of easing this credit crunch would help stem the crisis.”