GSE reform could put renters in peril

The Federal Housing Finance Agency may have determined that the multifamily mortgage market is no longer in need of the support of government-sponsored enterprises Fannie Mae and Freddie Mac, according to Mortgage News Daily.

For years, the multifamily market has been bolstered by support from the GSEs. Now, with the new reform, that support could be removed, leading construction of new rental units to plummet and the rental market to essentially collapse.

According to the Center for American Progress, the rental market is already suffering from a lack of inventory combined with an onslaught of new renters every year. With the GSEs backing the mortgage market, multifamily construction has been able to continue.

With the upcoming GSE reform, that support could be removed, leading the rental industry to stand on its own and with no real plan for its survival.

If this happens, rental property managers will be able to drive up rental rates and will receive thousands of rental applications, but in the long-term, renters could be driven away from the market due to its instability.