Housing Finance Working Paper Series
HF-002, The Multifamily Secondary Mortgage Market: The Role of Government-Sponsored Enterprises, by William Segal and Edward J. Szymanoski, March 1997.
This paper examines the performance of Fannie Mae and Freddie Mac in enhancing the liquidity and efficiency of the affordable segment of the multifamily mortgage market. The paper focuses specifically on the period since 1993, when HUD established affordable housing goals for these two Government-Sponsored Enterprises (GSEs). A private secondary mortgage market has developed to address the finance needs of higher end properties; yet a comparable market for mortgages on properties affordable to lower-income families lags in development. Placed within a wider market context, it is found that the GSEs have been cautious in their affordable multifamily transactions. It is concluded that the GSEs have the potential to do more to enhance the affordable segment of the multifamily mortgage market.