Fannie rental securitization deal draws fire from industry groups
March 15 2017, 1:22pm EDT
WASHINGTON — Industry groups are raising more concerns about a Fannie Mae financing deal involving the securitization of single-family rental homes, arguing it is too far removed from the government-sponsored enterprise’s mandate.
The Community Home Lenders Association and National Association of Realtors have both criticized the pending $1 billion securitization for Invitation Homes, a unit of Blackstone. Though Fannie has traditionally provided financing for mom and pop investors in single-family rental units, this “appears to take Fannie Mae into another line of buisness,” said Scott Olson, who heads the home lender group.
The deal creates “new types of risks” for Fannie, including the “challenges of maintenance of scatter site homes nationwide and unwinding such a large transaction if there are financial problems,” Olson said in a March 15 letter to the Federal Housing Finance Agency.
The Invitation Homes transaction will allow FHFA to assess “what role, if any, the GSEs should play in this market,” said FHFA Director Mel Watt. (Bloomberg News)
The trade group is also concerned the Invitation Homes transaction might “reduce home purchase opportunities and increase housing prices in some already strong markets by taking these homes off the market,” Olson wrote. “We are also concerned about whether there are provisions to ensure that the units being financed for rental are affordable.”
Earlier, the Realtor group said the deal will “drive up the price of rents and remove affordable inventory from the hands of homeowners.”
In response to the Realtors’ concerns, FHFA Director Mel Watt noted there are approximately 15.5 million detached single-family rental units in the U.S. The Invitation Homes transaction will allow the FHFA to assess “what role, if any, the GSEs should play in this market,” Watt said in a March 9 letter.
Fannie Mae also defended the deal. “Invitation Homes is a strong partner with deep experience managing a large volume of single-family rental properties,” according to a statement issued by the company.
“This deal helps us gather data and test the market to ensure we are delivering the right solutions. Fannie Mae is committed to continuously finding better ways to meet the changing needs of families, whether that is through rental options or homeownership.”