House Passes Two FHA Bills
MBA News, September 16, 2009
The House yesterday approved two bills that would give FHA more tools to handle its sharp increase in business and to raise its multifamily loan limit capacity.
The Mortgage Bankers Association, which supported both bills, praised the House action and urged the Senate to approve identical legislation for President Barack Obama's signature.
Both bills--H.R. 3146, the 21st Century FHA Housing Act, and H.R. 3527, the FHA Multifamily Loan Limit Adjustment Act--passed by voice vote.
H.R. 3146 would provide FHA with more resources to hire additional staff, upgrade its technology and more effectively review loan performance to mitigate risk. The bill also expresses congressional concern with the decline in warehouse lending and urges the Treasury Department, HUD and the Federal Housing Finance Agency to provide financial support and assistance to facilitate increased warehouse credit capacity by qualified warehouse lenders.
H.R. 3527 would increase FHA multifamily loan limits for elevator buildings and also provide the HUD secretary with additional authority to increase the loan limits in extremely high-cost areas. An MBA analysis showed a 45 percent difference in the construction cost between a non-elevator building and a building of eight to 24 stories. Currently, there is a less than 10 percent difference between the loan limits for elevator and non-elevator structures. H.R. 3527 would establish a 50 percent differential between elevator and non-elevator in each FHA insurance program and each unit size. This would further facilitate construction and rehabilitation of affordable rental housing in costly urban areas, such as New York City and Los Angeles.
MBA Chairman David Kittle, CMB, praised the bills' passage. "Passage of these two bills is further indication that the House is playing a proactive role in helping people who are being impacted by the current turbulence in the housing market,” he said. "Increasing the multifamily loan limits for structures with elevators is an important step to growing this country's supply of affordable rental housing in urban areas. The increased limits will make it possible for developers to obtain financing to build and rehabilitate high-rise housing.”
Additionally, Kittle said providing more resources for staffing and technology at FHA would allow it to continue to play its critical role in helping borrowers who may not have sterling credit or are unable to make a large down payment. “FHA needs to be able to hire and retain top quality staff and utilize 21st century technology if it is going to meet the growing demand for its products and adequately manage risks to its programs,” he said. “We are gratified to see Congress go on record in stating that HUD, Treasury and the FHFA ought to use their existing statutory and regulatory authority to help solve the crisis in warehouse lending. Independent mortgage lenders, who rely on warehouse lending, provide between 25 and 40 percent of all mortgage financing. Without adequate warehouse lines, these lenders may cease to exist, drawing precious capacity out of the mortgage market at a time when we need mortgage financing more than ever.”
"We hope the Senate will consider these bills quickly," Kittle added.