Rep. Carolyn Maloney, Leaders & Advocates Urge Reform Of Freddie Mac, Fannie Mae To Strengthen Protections For Affordable Housing-Real Estate Rama
New York, NY – May 22, 2010 – (RealEstateRama) — Congresswoman Carolyn B. Maloney joined with elected officials, community leaders, and affordable housing advocates at a news conference outside Stuyvesant Town to announce her introduction of legislation in Congress, H.R. 5361, that will sharply curtail the ability of Fannie Mae, Freddie Mac, and other government-sponsored enterprises (GSEs) to invest in future transactions that reduce the availability of affordable housing both in New York and nationwide. Representative Maloney was joined at the press conference by New York City Public Advocate Bill de Blasio; Manhattan Borough President Scott Stringer; NYS Assemblyman Brian Kavanagh; NYC Councilman Dan Garodnick; Alvin Doyle, the President of the Stuyvesant Town/Peter Cooper Village Tenants Association; and other consumer, housing and community advocates.
GSEs like Freddie Mac and Fannie Mae are mandated by the federal government to help increase affordable housing. However, Fannie and Freddie provided crucial liquidity for the purchase of Stuyvesant Town and Peter Cooper Village, even though the buyers’ business plan relied heavily on the use of aggressive tactics to convert rent-regulated apartments to market rate housing. What’s more, Fannie Mae and Freddie Mac earned “affordable housing goals credits” by investing in the Stuyvesant Town deal – despite the fact that the transaction did the opposite of creating or preserving affordable housing.
Congresswoman Maloney’s bill, the “Responsible GSE Affordable Housing Investment Act of 2010″(H.R. 5361), which has been cosponsored by New York Reps. Jerrold Nadler, Nydia Velazquez, Gregory Meeks, and Yvette Clarke, would require the Federal Housing Finance Agency (FHFA) to deny affordable housing goals credits when a project’s debt is disproportionate to its income – as was the case in the Stuyvesant Town/Peter Cooper Village sale. The bill will also require the GSEs to use the same standards for assessing their investments in the secondary securities market as they would for direct investments for the purposes of affordable housing goals credits, thus syncing the standards for securities investments with those of direct investments. In addition, Rep. Maloney and Financial Services Committee Chairman Barney Frank this week sent a letter to the Acting Director of the FHFA urging the Agency to use its power to deny affordable housing goals credits for multifamily loans that facilitate the conversion of units from affordable to a higher market rate. A full copy of that letter is attached.
“It’s outrageous that Fannie Mae and Freddie Mac aided and abetted efforts to slash New York’s stock of affordable housing. In the Stuy Town deal, Fannie and Freddie got affordable housing goals credit where no such credit was due – and for the good of our communities, that’s got to stop,” said Congresswoman Maloney. “My bill will sharply curtail the ability of Fannie, Freddie, and other GSEs to take part in transactions that depend on converting housing to market rate. Today, we’re sending the message to Fannie and Freddie that they should be investing in deals that increase affordable housing. That’s their stated mission — and they need to start living up to that mandate.”
Joining Representative Maloney at today’s news conference were several elected officials, community activists, and advocates for affordable housing. Among them were New York City Public Advocate Bill de Blasio, who said, “Fannie Mae and Freddie Mac were created to increase access to housing. When they funded an investment predicated on eliminating affordable housing at Stuyvesant Town and Peter Cooper Village, they failed that goal. The government should stop Fannie Mae and Freddie Mac from investing in any development deals that will threaten affordable housing. I applaud Congresswoman Maloney for spearheading legislative efforts which will help protect tenants at Stuy Town and Peter Cooper Village and throughout our city.”
“Organizations like Fannie Mae and Freddie Mac should not be lending a helping hand to developers who look at our city’s dwindling stock of affordable housing with dollar signs in their eyes. Preserving affordable housing is a priority for every level of government, and we must ensure that our government sponsored enterprises don’t hinder that mission. I applaud Congresswoman Maloney for introducing this vital, common sense legislation that will protect America’s tenants,” said Manhattan Borough President Scott Stringer.
NYS Assembly Member Brian Kavanagh, who represents the community in the State Assembly, said, “I applaud Carolyn Maloney for this effort to require Fannie Mae and Freddie Mac to heed the lessons we’ve learned from Tishman Speyer’s and their associates’ overly aggressive, ill-fated purchase of Stuyvesant Town and Peter Cooper Village in 2006. Even as we work to hold Fannie and Freddie accountable for their past actions–and to ensure that they play a productive role as this community seeks a strong voice in its future–we need long-term assurances that they and other government-sponsored enterprises will not repeat this kind of predatory behavior that violates the public trust and runs counter to the purposes for which they were created.”
“Fannie and Freddie’s investments should not come at the harm of the very taxpayers who support them and who propped them up when they needed help,” said Council Member Dan Garodnick. “It is possible to do well, even while you’re doing good. That’s what we expect from Fannie and Freddie, and that’s what we will get with Congresswoman Maloney’s legislation.”
Alvin Doyle, President of the Stuyvesant Town/Peter Cooper Village Tenants Association, said, “Tenants at Stuyvesant Town and Peter Cooper Village are grateful to Congresswoman Maloney for introducing this bill, which will help prevent GSE-financed deals like the recent sale of our complex, which has resulted in a loss of affordable housing stock. Her legislation will help ensure that Freddie Mac and Fannie Mae act in a responsible manner and encourage the preservation of affordable housing.”
New York State Senator Thomas K. Duane, who represents Stuyvesant Town and Peter Cooper Village in Albany but was unable to attend the press conference due to a scheduling conflict, said in a statement, “I applaud Congresswoman Maloney’s efforts to rectify the system by which government-sponsored enterprises (GSEs) are credited for financing affordable housing in New York City and across the nation. This bill makes necessary adjustments to ensure the true, long-term affordability of housing units in which GSEs invest. Taxpayers should not be subsidizing housing investments, like those Fannie Mae and Freddie Mac made in Stuyvesant Town/Peter Cooper Village, that are not viable unless rents are raised to unaffordable levels.”
Congresswoman Maloney’s bill has also garnered support from advocates for consumers and for affordable housing. Denise Scott, Managing Director of the Local Initiatives Support Corporation (LISC) of New York, said, “This bill will discourage Fanni