Payroll Tax Cut Extension Raises FHA Multifamily Premiums

Monday, January 16, 2012

The year-end deal to temporarily extend the payroll tax cut includes an increase in the GSE guarantee fee to help offset the costs of the program.  Apartment firms should note that this increase applies only to single-family mortgage securities; multifamily securities are unaffected.  However, another provision in the bill will raise the FHA multifamily mortgage premium by 10 basis points.

More important is the potential impact the G-fee provision will have on long-term efforts to eliminate the GSEs.  By including 10 years of revenue from the G-fee in the program extension, lawmakers now have a strong incentive to retain Fannie Mae and Freddie Mac—or at least enact reform legislation that mandates a long transition to any new system. 

NAA/NMHC will continue to protect the well-functioning multifamily housing finance sector as Congress seeks to address the flaws in the single-family sector.