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Federal Rental Housing Program Shuts Down For Lack Of Funds; $3.4 Billion In Construction Endangered
MBA Calls For Immediate Action To Release Money Already Set Aside

WASHINGTON, D.C. (May 3)-Development of more than 50,000 desperately needed rental units in 33 states and the District of Columbia will come to a halt unless Congress and the Bush administration take immediate action to reverse an announced shutdown of the Federal Housing Administration's (FHA) mortgage insurance program, said the Mortgage Bankers Association of America (MBA) in testimony today before a subcommittee of the U.S. House Financial Services Committee. The FHA has advised lenders that it will stop insuring multifamily housing loans this month, claiming that the agency has run out of money to back the loans.

Information released today by MBA shows that more than $3.4 billion in federally insured loans for affordable rental housing currently in development will be suspended due to a lack of funding to back the loans. Although Congress already has appropriated sufficient money to continue insuring some loans, the Bush administration has not released the funds. MBA is asking lawmakers and the administration to release the money-$40 million for a loan loss reserve necessary to back FHA-insured multifamily loans. The association is seeking an additional $115 million for the remainder of fiscal 2001. The total of $155 million in "credit subsidy" will permit FHA to back more than $3.4 billion in loans, which will fund development of more than 50,000 units of rental housing. (A list of the states and cities that have projects that will be affected is attached.)

"These funds are critical to alleviating the current shutdown in the multifamily new construction and substantial rehabilitation programs," MBA Vice President John A. Courson told the Housing and Community Opportunity Subcommittee. "We support President Bush and HUD Secretary Mel Martinez in their efforts to strengthen the economy. But without these funds, projects will not be built, and an opportunity to provide an immediate economic stimulus and produce tens of thousands of construction jobs will be lost."

Among the areas hardest hit by the shutdown of the FHA insurance program, Texas will lose 13,124 units with loans totaling more than $730 million, Florida will lose more than 4,500 units with loans of more than $350 million, and the Maryland-District of Columbia-Virginia area will lose more than 6,100 units with loans of almost $500 million.

"The nation is now facing an affordable housing crisis, and it is particularly acute in my own city of Boston," said Mayor Thomas M Menino, who also serves as chairman of the U.S. Conference of Mayors Advisory Board. "Resolving the FHA multifamily credit subsidy crisis will ensure that FHA multifamily programs are available to cities that are in desperate need of more rental housing."

"FHA's multifamily mortgage insurance programs are critical to builders' efforts to meet the great demand for affordable rental housing for working families across the country," said Bruce Smith, president of the National Association of Home Builders. "NAHB urges the administration to immediately release for the FHA programs the $40 million in supplemental appropriation, and we also urge Congress to make affordable housing a priority in the next year's budget and fund enough credit subsidy to meet the demand in fiscal 2002."

Added Richard Mendenhall, president of the National Association of Realtors, "We believe an important and immediate step is the release of the fiscal 2001 $40 million emergency supplemental appropriation to fund pending rental projects, and we call on Congress to encourage the administration to support this need."

Last December, in an attempt to avert a crisis in the production of affordable rental housing, Congress approved $40 million as an emergency supplemental appropriation. But the funds only can be tapped if an emergency is declared by the Bush administration and if other requirements are met. Officials at the White House Office of Management and Budget and at the U.S. Department of Housing and Urban Development have indicated that the administration will not invoke the emergency provision necessary to release the funds.

In an April 26 letter to HUD Secretary Martinez, Rep. Spencer Bachus, R-Ala., a member of the Financial Services Committee, expressed his concerns about the FHA crisis: "These funds are critical to avoiding a shutdown in the multifamily new construction and substantial rehabilitation insurance programs ... Some FHA lenders, including at least one in Birmingham, have already run out of credit subsidy and will be forced to shut down projects."

In his testimony, Courson also voiced MBA's support for Secretary Martinez's plan to increase FHA multifamily mortgage insurance loan limits and for legislation (H.R. 1629) introduced by Reps Marge Roukema, R-N.J., and Barney Frank, D-Mass., to raise the loan limits by 25 percent. MBA also announced its support for legislation (H.R. 1481) cosponsored by Reps. John J. LaFalce, D-N.Y., and Frank that would allow HUD to use excess money generated by some programs in FHA's General Insurance/Special Risk Fund to offset the credit subsidy required by programs that are estimated by the Office of Management and Budget to need loan loss reserves.

In addition to the credit subsidy issue, Courson urged the subcommittee to:

  • Increase the loan amount for multifamily projects that FHA may insure.
  • Support the President's proposal to permit FHA to offer flexible adjustable rate mortgages to expand homeownership.
  • Make permanent the current down payment simplification calculation used for FHA's single-family insurance program.
  • Approve "brownfields" legislation to promote the cleanup and redevelopment of abandoned, idled, or underutilized industrial and commercial sites.CityLoan AmountUnits


Alabama
City / Loan Amount / Units
____________________
Auburn $6,500,000 152
Clanton$3,900,000 64

$10,400,000 216

Arizona
Apache Junction$9,336,800 176
Chandler$4,013,700 127
Lake Havasu$4,500,000 300
Mesa$17,069,600 264
Prescott$6,486,300 124
Prescott Valley$19,845,000 268
Surprise$15,500,000 256

$76,751,400 1515

California
Citrus Heights$15,000,000 300
North Hollywood$23,000,000 198
Perris$5,000,000 186
San Francisco$2,150,000 55
San Jose$8,500,000 88

$53,650,000 827

Colorado
Aurora$18,000,000 200
Colorado Springs$18,000,000 252
Commerce City$10,639,800 162
Denver$22,300,000 260
Denver$4,325,500 155
Golden$2,400,000 34
Greeley$5,567,100 160
Lakewood$7,000,000 100
Ridgeway$2,759,000 192

$90,991,400 1515

Connecticut
Groton$20,000,000 240
Hartford$25,222,200 97
New Haven$8,721,000 85

$53,943,200 422

District of Columbia
Washington$37,892,100 194
Washington$11,706,800 275

$49,598,900 469

Florida
Casselberry$18,260,200 240
Cornerstone Commons$12,800,000 104
Davenport$10,375,500 160
Delray Beach$18,485,100 165
Fort Myers$20,616,500 300
Fort Pierce$1,200,000 59
Gainesville$29,199,700 332
Harbor Island$7,000,000 60
Hypoluxo$6,600,800 88
Lake Wales$5,583,300 100
Lake Worth$21,913,700 285
Miami$20,000,000 200
Miami$8,000,000 60
New Port Richey$17,296,000 220
New Smyrna Bch$14,500,000 216
Ocala$8,713,800 162
Orlando$15,235,900 198
Orlando$16,000,000 165
Pasco County$16,846,600 252
Port Orange$15,759,600 223
Sarasota$3,000,000 38
St. Augustine$12,851,300 178
St. Petersburg$17,681,000 261
Tallahassee$19,100,000 242
Zephyrhills$15,976,500 224

$352,995,500 4532

Georgia
Athens$13,936,100 208
Athens$6,100,000 190
Atlanta$8,504,800 208
Atlanta$23,448,600 300
Atlanta$7,005,800 216
Atlanta$10,618,800 180
Carrollton$6,653,400 120
Newnan$8,326,900 284
Pooler$20,291,600 309
Villa Rica$13,598,500 220
Villa Rica$5,295,400 96

$123,779,900 2331

Iowa
Des Moines$24,000,000 335

Illinois
Elburn$1,737,500 46
Fairview Heights$15,600,000 228
Gurnee$20,000,000 260
Park Forest$35,000,000 632

$72,337,500 1166

Indiana
Ft. Wayne$8,000,000 240
Indianapolis$10,044,000 162
Indianapolis$12,384,400 208
Indianapolis$17,314,800 163
Lowell$4,637,900 72

$52,381,100 845

Kansas
Andover $11,250,000 168
Desoto$10,000,000 200
Kansas City$6,986,800 120
Topeka$18,600,000 288

$46,836,800 776

Kentucky
Florence$36,000,000 493
Louisville$12,659,200 200

$48,659,200 693

Louisiana
Lafayette$12,400,000 158
Lake Charles$2,500,000 104
Lake Charles$7,000,000 208
New Orleans$4,750,000 160
New Orleans$1,400,000 56
Shreveport$6,500,000 126

$34,550,000 812

Massachusetts
Amesbury$6,000,000 69
Westford$24,479,100 177

$30,479,100 246

Maryland
Baltimore$53,252,100 315
Baltimore$6,000,000 262
Baltimore$3,000,000 110
Baltimore$3,000,000 123
Cambridge$1,850,000 140
Frederick $8,000,000 96
Frederick $20,000,000 250
Frederick $11,849,600 144
Gaithersburg$3,800,000 33
Landover $10,500,000 276
Pasadena$20,000,000 223
Salisbury$11,845,400 168
Silver Spring$8,378,200 99
Silver Spring$16,123,400 221
Upper Marlboro$1,011,100 160
Upper Marlboro$13,415,700 155

$192,025,500 2775

Michigan
Alpena$6,500,000 120
Canton$17,400,000 192
Detroit$2,200,000 16
East Lansing$24,764,600 264
Grand Haven$12,400,000 210
Howell$7,500,000 100
Lansing$6,484,400 136
Norton Shore$11,800,000 210
Roseville$1,500,000 18

$90,549,000 1266

Minnesota
Birch Glen$5,216,000 60
Country Manor$4,700,000 144
Kenwood Crssng$25,000,000 243
Lakeview Apts.$2,534,000 50
Marcy Park$6,500,000 53
Pennock Place$10,800,000 106
Shadow Hills$28,000,000 318
St. Louis Park$46,726,000 317
Stonegate Apts.$3,225,000 43
Timberland @ Foliage$14,000,000 208

$146,701,000 1542

Mississippi
Pascagoula$11,378,900 200
Starkville$7,504,500 120
Hattiesburg$11,833,600 200

$30,717,000 520

Missouri
Columbia$12,000,000 182
Ellisville$16,000,000 160
Gladstone$8,795,000 154
Kansas City$11,900,000 440
Kansas City$16,329,632 256
Kansas City$24,800,000 324
Lake St. Louis$30,625,000 344
O'Fallon $8,900,000 168
St. Charles$7,128,000 93
St. Charles$23,000,000 182
St. Louis$18,800,000 200
St. Louis$9,234,000 82

$187,511,632 2585

North Carolina
Charlotte $22,000,000 174
Charlotte$9,600,000 144
Charlotte$10,184,700 144
Fayetteville$8,500,000 136
Greensboro$5,180,800 60
High Point$8,300,000 96
High Point$8,288,600 85
Holly Springs$5,500,000 100
Lexington$8,281,000 160
Mocksville$6,652,800 132
Morganton$4,099,100 70
Raleigh$10,000,000 128
Raleigh$16,914,600 238
Raleigh$10,000,000 156
Raleigh$16,600,000 264
Saxapahaw$5,900,000 93
Saxapahaw$5,485,400 90

$161,487,000 2270

New Jersey
N. Bergen$31,000,000 174
Newark$20,122,000 422
Palisades Park$42,229,900 204

$93,351,900 800

Nevada
Las Vegas$2,624,000 58
Las Vegas$4,450,800 51
Las Vegas$2,673,308 41
Reno$4,000,000 194

$13,748,108 344


New York
Nanuet$8,006,500 106
Rochester$14,592,200 125

$22,598,700 231

Ohio
Akron$16,028,600 130
Ashland$6,736,200 128
Cleveland$41,000,000 331
Cleveland$5,000,500 165
Cleveland$20,504,500 139
Columbus$7,678,400 152
Columbus$17,898,300 280
Columbus$16,200,000 180
Columbus$27,063,400 276
Columbus$18,539,800 180
Copley$10,500,000 160
Kettering$5,400,000 165
London$4,557,000 80
Marion$3,662,300 80
Mt. Verno$2,574,300 52
Northwood$6,000,000 200
Pickerington$4,000,000 52
Warrensville$4,900,000 96

$218,243,300 2846

Oregon
Hillsboro$5,920,000 65
Portland$21,350,000 326

$27,270,000 391

Pennsylvania
Hermitage$3,949,300 54
Palmyra Twnship$14,716,500 85
Scott Twnship$29,841,000 300
Pittsburgh$13,383,000 144

$61,889,800 583

South Carolina
Bluffton$29,150,000 360
Bluffton$5,453,100 112
Columbia$1,429,00 035
Columbia$11,600,000 184
Duncan$10,000,000 168
Greenville$10,900,000 168
Greenville$11,156,800 192
Greer$12,500,000 208
Orangeburg$6,068,300 120
Rock Hill$8,300,000 120
Simpsonville$10,212,900 168
Walterboro$7,700,000 84
Walterboro$7,665,600 120

$132,135,700 2039

Tennessee
Ashland City$3,570,000 116
Gallatin$2,375,000 72
Maryville$1,500,000 30
Memphis$9,470,600 133
Memphis$1,300,000 14
Pulaski$1,200,000 52
White House$6,150,000 106

$25,565,600 523

Texas
Austin$13,561,200 192
Austin$3,402,000 180
Austin$20,637,000 300
Austin$25,507,000 362
Austin$22,225,000 348
Austin$13,700,000 212
Beaumont$4,835,000 150
Burleson$5,000,000 50
College Station$8,000,000 200
Corpus Christi$12,759,700 228
Crowley$5,900,000 125
Dallas$43,000,000 364
Dallas$17,790,000 280
Dallas$5,000,000 192
Dallas$5,161,000 117
Dallas$15,280,300 248
Denton$27,174,700 300
Denton$12,401,700 240
Desoto$13,500,000 222
El Paso$9,707,500 289
Falfurrias$2,300,000 60
Floresville$2,600,000 76
Fort Worth$9,010,200 160
Fort Worth$11,947,000 190
Fort Worth$5,000,000 176
Fredericksburg$5,000,000 80
Houston$2,049,300 102
Houston$16,131,500 276
Houston$23,462,100 362
Houston$15,000,000 300
Houston$13,062,700 200
Houston$19,151,000 300
Houston$12,277,100 429
Houston$7,486,000 224
Houston$9,386,000 272
Houston$7,454,000 144
Lakeway$28,000,000 342
Laredo$11,000,000 250
Lewisville$20,088,500 312
Magnolia$5,610,281 164
New Light Villag$6,150,000 184
Pearland$2,994,927 225
Pearland$12,473,400 168
Plano$14,462,400 220
Port Arthur$11,699,100 200
San Antonio$21,000,000 250
San Antonio$14,100,000 250
San Antonio$13,000,000 250
San Antonio$14,043,000 240
San Antonio$15,137,000 368
San Marcos$16,173,700 204
Terrell$9,000,000 180
Wichita Falls$5,000,000 100
Wichita Falls$3,122,000 41
Wylie$9,976,500 180

$678,889,808 12078

Utah
Draper$18,887,400 258

Virginia
Alexandria$40,000,000 400
Ashburn$49,640,000 443
Bealeton$8,800,000 132
Charlottesville$20,000,000 250
Chester$7,436,800 105
Fairfax$22,000,000 209
Newport News$27,000,000 383
Richmond$3,531,300 45
Richmond$6,000,000 71
Richmond $32,000,000 378
Suffolk$22,248,400 328
Warrenton$13,625,000 158

$252,281,500 2902

Washington
Blaine$687,800 24
Cheney$1,213,500 40
Everett$1,955,300 40
Ferndale$1,409,600 38
Kennewick$2,261,400 104
Moses Lake$1,166,100 40
Mt. Vernon$1,057,700 36
Othello$1,043,200 30
Seattle$12,960,000 86
Steverson$1,480,700 36
Wapato$788,800 24

S$26,024,100 498

Wisconsin
Brookfield$18,900,000 311
Lake Delton$2,400,000 40
Milwaukee$18,000,000 110
St. Francis$14,500,000 120

$53,800,000 581


Totals $ 3,555,031,048 51,732

Note: The data are complied from information on 33 states plus the District of Columbia.


MBA is the national association representing the real estate finance industry. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets, to expand homeownership prospects through increased affordability, and to extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters excellence and technical know-how among real estate finance professionals through a wide range of educational programs and technical publications. Its membership of approximately 2,800 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, life insurance companies, and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mbaa.org.

News Release

CONTACT:
Kathy Buchanan (202) 557-2730
Dave Warner (202) 557-2843

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