The current federal guarantee of Fannie Mae and Freddie Mac multifamily lending activity poses serious risks to taxpayers and industry participants. The guarantee (1) drives out private competitors by backing loans at uncompetitive low rates relative to private-sector costs; (2) presses guarantors to issue imprudent loans in response to political pressure to increase affordability; (3) increases the use of debt over equity and of debt to finance weaker properties; and as a result (4) exposes taxpayers to risk when the next bottom of cycle hits. This federal guarantee must be phased out, and the federal footprint in the multifamily lending industry should be restricted to a well-focused role for the Federal Housing Administration (FHA). This paper addresses the concerns associated with phasing out the federal multifamily guarantee and prescribes a detailed roadmap for moving toward a fully private multifamily finance system.