FHFA invited further comment on the merit of considering properties without affordable use restrictions as part of the Enterprises’ duty to serve, noting that affordable housing preservation “encompasses efforts to keep unsubsidized properties in good condition while maintaining affordability for low- and moderate-income households.” (Page 32102)

FHFA should be certain that any aid given to buildings without affordable use restrictions will actually be passed on in large part to their tenants, whether through lower rents or improved conditions. I question whether that is in fact the case.

There are two main rationales for subsidizing multifamily buildings without affordable use restrictions. First, they provide housing to the neediest tenants: low- and moderate-income families who are not fortunate enough to have obtained subsidized apartments. Second, the multifamily mortgage market is subject to market failures that make government intervention appropriate. I will assess these two rationales in turn.