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Senate Bill Would Spur Apartment Construction in High-Cost Areas

In a move that would spur apartment construction in such major metro markets as Boston, San Francisco, New York, Los Angeles and Chicago, the Senate Banking Committee last week approved legislation that would raise FHA multifamily loan limits in high-cost areas.

Largely through the efforts of longtime housing champion Sen. Jon Corzine (D-NJ), a slightly modified version of his recently introduced legislation, S. 1714, was incorporated into S. 811, the “American Dream Downpayment Act.” S. 811 would authorize $200 million annually in grants to assist low- and moderate-income home buyers with downpayment and closing costs. Sen. Wayne Allard (R-CO) also assisted in winning acceptance of the Corzine amendment.

On Oct. 7, the House passed similar legislation, H.R. 1985, introduced by Rep. Gary Miller R-CA) and Rep. Barney Frank (D-MA), which would increase the new limits for loans in high-cost areas from the current 110% above the base limit to 170% above the limit. The chamber also passed its version of the American Dream Downpayment Act bill (H.R. 1276) on Oct. 1.

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The FHA multifamily mortgage insurance program is an important source of financing for affordable multifamily rental housing. A top legislative priority for NAHB’s multifamily builders, the bill would enable developers in high-cost markets who are presently unable to take advantage of the loan program to utilize the FHA-backed loans, which offer lower interest rates and a longer payment period than conventional loans.

NAHB also supports the American Dream Downpayment Act, but would prefer to see the initiative funded as a stand-alone program, rather than under the auspices of the HOME Investment Partnerships Program, which is the largest federal block grant program for state and local governments to provide funding for the development of affordable housing.

It is anticipated that the full Senate will consider S. 811 by next month and the measure would then go to a House-Senate conference for final approval.
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