On Tuesday, the House of Representatives passed the 21st Century FHA Housing Act and the FHA Multifamily Loan Limit Adjustment Act, which seek to add capacity to the Federal Housing Administration (FHA) and allow the FHA to raise its multifamily loan limits, respectively.
The Mortgage Bankers Association (MBA) has issued a statement supporting the bills as they exist in the forms passed by the House. ‘We hope the Senate will consider these bills quickly,’ MBA Chair David Kittle said.
The 21st Century FHA Housing Act, H.R.3146, is part of the FHA Modernization initiative and addresses staffing levels, technology and risk management policies that proponents say need to be bolstered for the FHA to manage its increased market share.
The bill also notes the problem of limited warehouse lending activity in the marketplace. Estimates suggest that warehouse lending capacity available to the mortgage industry has declined since 2006 by nearly 90% to the current level of approximately $20 billion to $25 billion.
"Independent mortgage lenders, who rely on warehouse lending, provide between 25 and 40 percent of all mortgage financing," Kittle said. "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."
The second bill, H.R.3527, would allow the FHA to increase multifamily loan limits for elevator buildings and for extremely high-cost areas. The MBA estimates that buildings without elevators cost about 45% less, on average, to construct than a building with eight to 24 stories. The current difference in loan limits between elevator buildings and non-elevator buildings is less than 10%.
In a Sept. 14 letter to House members, 15 trade groups, including the National Low Income Housing Coalition and the National Apartment Association, wrote about the potential impact of H.R.3527 being signed into law.
"A recent survey of major lenders shows that there are more than 11,000 units in elevator structures with a mortgage amount of more than $3 billion that are on hold and, when H.R. 3527 is passed, should be able to move forward using the FHA programs. These properties are in many urban areas across the country, from Seattle and Los Angeles, to Houston, Columbus and Chicago, to Boston and New York," the letter says.