Why US help apartment investors get richer? Aren’t they rich enough super low interest rate loans?

Good question.

Multifamily properties—those with five or more units—provide shelter for approximately one-third of the more than 100 million renters in the United States and account for about 14 percent of all housing units. Mortgages carrying an actual or implied federal guarantee have been an important source of financing for acquiring, developing, and rehabilitating multifamily properties, particularly after the collapse in house prices and credit availability that accompanied the 2008–2009 recession.

According to the Federal Reserve, the share of outstanding multifamily mortgages carrying such a guarantee increased by 10 percentage points, from 33 percent at the beginning of 2005 to 43 percent at the end of the third quarter of 2014. (A slightly larger increase of about 16 percentage points occurred in the federal government’s market share of the much larger single-family market.) Such guarantees are made by a variety of entities, and some policymakers are looking for ways to make the federal government’s involvement more effective. Other policymakers have expressed concern about that expanded federal role and are looking at ways to reduce it.

The federal government’s support of the multifamily mortgage market is one of many federal policies aimed at providing support for rental housing for low- and moderate-income families. Mortgage guarantees made by the Federal Housing Administration (FHA), the Rural Housing Service (RHS), and Fannie Mae and Freddie Mac—the two large government-sponsored enterprises (GSEs) that have been operating under federal control since 2008—increase the availability of mortgage credit. They do that primarily by insuring investors who buy mortgage-backed securities (MBSs) against losses that they would incur if the mortgage borrowers—whose mortgage loan payments provide the cash flows for those securities—defaulted. Those loan guarantees help to provide liquidity and stability to the market for those mortgages, particularly during periods of stress. They also lower the cost of financing multifamily housing projects slightly, because the fees the borrowers pay for their guarantees are lower than what a private guarantor would charge.

I hope that helps and good luck with your investing!

Benjamin Z Miller
www.benjaminzmiller.com