MBA Backs Senate Proposal to Restart FHA Program

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RISMEDIA-NRRE August 2001

Industry News

MBA Backs Senate Proposal to Restart FHA Program

The Mortgage Bankers Association of America (MBA) is urging the U.S. Senate to approve legislation that will restart a federal loan insurance program and pave the way for the development of more than 50,000 rental units in 33 states and the District of Columbia.

The Senate Appropriations Committee on June 22 passed a fiscal 2001 supplemental spending bill that would release $40 million in credit subsidy, or loan loss reserves, for the Federal Housing Administration?s (FHA) multifamily mortgage insurance program.

The program came to a halt in April when the FHA ran out of credit subsidy, and development on about 53,000 rental units also ceased.

Although Congress in December passed an emergency supplemental spending bill to continue insuring some FHA multifamily loans, the Bush administration had refused to declare an emergency to release the funds. The Senate bill removes the emergency designation.

“These funds are critical to alleviating the current shutdown in the multifamily new construction and substantial rehabilitation programs,” says Michael F. Petrie, president of P/R Mortgage and chairman of MBA?s Commercial Real Estate Finance/Multifamily Board of Governors.

The U.S. House of Representatives earlier approved its version of the supplemental spending bill with a provision related to the FHA multifamily loan insurance program. While the House bill also appropriates $40 million for the FHA credit subsidy, it ties the funds to an increase in the multifamily loan insurance premiums.

MBA strongly opposes the insurance premium increase, which it says would raise rents by up to 4%, and will urge House and Senate conference committee members-who will meet to work out differences between the two supplemental spending bills-to adopt the Senate language on the FHA credit subsidy.