NAHB Supports FHA Underwriting Standards That Meet Market Needs
NAHB has recently begun discussions about proposed Department of Housing and Urban Development changes to the underwriting standards of its mortgage insurance programs that are not restrictive and better reflect the needs of the current economic environment.
Shortly after the International Builders’ Show in January, HUD announced proposed changes to the Federal Housing Administration’s (FHA) 221(d)(4) program — which is used for multifamily construction and substantial rehab — and 223(f) program — which is used to purchase or refinance existing multifamily properties.
Both HUD mortgage insurance programs have become increasingly vital to the multifamily industry as traditional lenders have dramatically reduced their lending to developers.
The FHA is concerned that existing credit risk management standards and approval processing for these programs may not appropriately reflect the needs of today’s economic environment and it is therefore considering making significant changes to the programs’ underwriting standards.
“NAHB supports the FHA and its loan guarantee programs,” said NAHB CEO Jerry Howard. “We recognize the need for these two programs to remain strong and viable options for multifamily developers now and in the future, and to make sure that the changes being considered do not make these programs so restrictive that they are no longer usable by our members. We look forward to working with FHA to strengthen these two vital housing programs.”
In a recent meeting with HUD Assistant Secretary for Housing/Federal Housing Administration (FHA) Commissioner David H. Stevens, NAHB expressed concerns about some of the changes. Stevens said HUD will discuss the proposed measures thoroughly with the industry before implementing any changes.
NAHB recently concluded a review of the proposed changes and is in the process of coordinating a follow-up meeting to discuss industry concerns with HUD Deputy Assistant Secretary Carol Galante.
To view the proposed changes, click here.
Conference Call on Exceptions to Condo Policy
During the initial meeting with FHA Commissioner Stevens, NAHB also learned that HUD is developing a protocol for granting exceptions to its condo policy on a case-by-case basis and will be seeking comment from NAHB members.
HUD and NAHB will be holding a conference call for NAHB to provide feedback. The condo policy changes were outlined in two mortgagee letters last year.
The second letter, which is in effect until Dec. 31, temporarily increases the allowable FHA concentration in a project from 30% to 50% and decreases the pre-sale requirement from 50% to 30%.
For more information, e-mail Claudia Kedda at NAHB, or call her at 800-368-5242 x8352.