HUD Convinced Not to Raise FHA Multifamily Premiums
Persuaded by the arguments of NAHB’s members, its lobbyists and staff, the Department of Housing and Urban Development (HUD) has cancelled its plan to increase the premiums that developers are required to pay on FHA’s multifamily mortgage insurance (MIP).
FHA Commissioner Brian Montgomery, in a call to NAHB last week, said that the current MIP rates will stay in effect for FY2007.
The official announcement, which now appears on HUD’s Web site, attributes the change of plans to the large volume of comments from the public and industry associations, as well as a letter signed by 121 members of the U.S. House of Representatives and 26 U.S. senators.
HUD described the feedback as “overwhelmingly opposed to the MIP increases proposed for a number of HUD’s multifamily housing mortgage insurance programs.” Most cited the proposal’s negative effect on the affordability of rental housing.
Had the increase been implemented, the mortgage insurance premiums that multifamily developers would have been required to pay for a key FHA program — Section 221(d)(4) program — would have jumped from 45 basis points to 77 basis points.
“HUD’s decision to keep the MIP levels at their current levels is beyond huge,” said Cathy Pharis, a lender with Deutsche Bank and a member of NAHB’s Housing Credit Group. “The industry has fought for nearly a decade to have the MIP levels set at the rate necessary to maintain the viability of the insurance fund, rather than on an arbitrary basis, and we nearly lost all of the ground that had been gained through that fight.”
“The HUD programs have many very attractive features, but a 32-basis-point increase in MIP would definitely have had a significant negative impact on our ability to close loans,” Pharis added.
NAHB, in its comments to HUD, argued that raising the cost of providing mortgage insurance that is critical to developing affordable housing was bad public policy. NAHB also provided compelling statistical information complied by economists from NAHB’s Housing Policy & Finance department that clearly contradicted HUD’s initial assertion that the program does not serve a public purpose. In addition, NAHB’s legislative staff worked tirelessly to mobilize those elected representatives who value the nation's federal housing programs to speak out on this issue.
“In our market, when we’re trying to build affordable and middle-market housing, the difference between the current and the proposed FHA program premiums could have been the difference between doing and not doing a project with a tight budget,” said Steve Lawson, who develops and builds rental housing in Virginia Beach, Va. “The increase would have made the FHA programs far less competitive in the marketplace.”
NAHB worked with the Mortgage Bankers Association and other industry groups in a concerted effort to prevent the proposed premium increase.
NAHB applauds the decision to rescind the proposed increase and has offered to work with HUD as it evaluates the insurance pricing premiums for future years.
For more information, e-mail Ann Marie Moriarty at NAHB, or call her at 800-368-5242 x8350.
Enter Pillars to Be 'Best of the Best' in Multifamily
The application deadline for NAHB Multifamily’s 2007 Pillars of the Industry Awards program — which honors excellence in multifamily design, development, marketing and management — is Nov. 30.
A showcase of innovation and future trends, Pillars is considered to be the most prestigious national awards competition in the multifamily housing industry.
The winners will be honored at a gala ceremony held in conjunction with NAHB Multifamily’s Pillars of the Industry Conference in New Orleans on April 11-13.
For more information and to apply, visit www.nahb.org/pillarsawards, or e-mail Laura Zaner at NAHB, or call her at 800-368-5242 x8563.
Save the Date for the Multifamily Pillars of the Industry Conference
Attend the Multifamily Pillars of the Industry Conference, the premier industry event for the multifamily industry, on April 11-13 in New Orleans.
Visit www.nahb.org/pillars for more information.