Public Housing Mortgages
I recently reviewed an interesting in Bloomberg news article (https://www.bloomberg.com/news/articles/2016-10-13/wall-street-s-latest-bond-collateral-federally-subsidized-rents?utm_content=buffer0fe25&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer) about Wall Street’s foray into mortgage bonds of subsidized rental properties. With the statutory cap of RAD expected to rise with a new Congress. It is imperative that we consider the systematic risk in the securitization of mortgage bonds backed by federally subsidized rental properties. We must fully reviewed and throughly disseminate to the public and industry/resident stakeholders on the vast implications of public housing mortgage profileration.
The public housing privization has metaswized with the HUD administered program, Rental Assistant Demonstration (RAD) will have incremental systematic impact on the housing market. PHA-property backed mortgage bubble???
These will be bonds that will depend on the rental income from tenants who are safety net benefit recipients and low income plagued with income stagnation. We are setting public housing in a questionable direction. Another bubble this time for public housing whose future has remained uncertain due to operating subsidy proration.
It is important that we include in the dialogue around RAD, its impact on the federal housing market as many of the mortgages of previous PHA properties will be insured by FHA or Fannie Mae.
Financial Market Impact/Oversight
Congress, HUD Office of Public & Indian Housing, HUD Region 2, Federal Housing Finance Agency must complete thorough and extensive analysis (“stress tests”) of mortgaged backed by PHA/RAD converted properties.
