The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, will conclude their single-family rental pilot programs and terminate their participation in the single-family rental market, according to the Federal Housing Finance Agency (FHFA).
However, both GSEs will continue to participate in their previously existing investor programs, Fannie Mae’s Multiple Financed Properties and Freddie Mac’s Investment Property Mortgages.
Over the past two years, both organizations have dabbled in the single-family rental market through pilots designed to “test and learn” more about the market and best practices. In addition, FHFA convened a Single-Family Rental Workshop in June 2017 to solicit feedback, identify market challenges and opportunities, and gain perspective on the overall market. Participants in the pilot transactions included institutional investors, which own only a small sliver of single-family rental stock, as well as small and mid-sized investors with fewer financing options.
The single-family rental arena has been gaining traction ever since the Great Recession (especially in these metros), and is the fastest-growing segment of the rental market. But as the economy has picked back up, this market has slowed compared with its boom a few years ago.
“What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises,” said FHFA director Melvin Watt in a news release.
The FHFA added that it "recognizes the potential need for long-term financing for mid-size investors that own affordable single-family rental assets, but believes it is premature to allow the Enterprises to enter this portion of the single-family rental market because the effects of their participation on rent growth, long-term affordability, for-sale assets, and homeownership is insufficiently understood without significantly more extensive research and analysis."
