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JOINT PRESS STATEMENT

TAX ON RENTERS IS WRONG REMEDY FOR FHA RENTAL CRISIS

WASHINGTON, June 1 - The Mortgage Bankers Association of America (MBA) and the National Association of Home Builders (NAHB) strongly oppose an increase
in the FHA multifamily insurance premium, which would amount to a tax on renters. While Secretary Martinez is to be applauded for addressing the shutdown of FHA's rental program, the organizations believe that raising the premium is the wrong approach to solving the current shortfall in FHA's multifamily insurance program.

The U.S. Department of Housing and Urban Development today announced that it would circumvent the rulemaking process by instituting an immediate increase in the FHA multifamily insurance premium. In exchange for a 30 basis point increase, HUD is proposing $40 million in supplemental funds to restart the multifamily insurance program. The program was shut down April 19 when the agency ran out of its loan loss reserve, or credit subsidy.

"The proposed premium increase is a tax on renters and would cause multifamily rents to increase by 4 percent," said Michael Petrie, president of P/R Mortgage and chairman of MBA's Commercial Real Estate Finance/Multifamily Board of Governors. "At a time when the national economy is struggling, this increase would hurt those families that can least afford it. The FHA multifamily credit subsidy crisis urgently needs to be addressed but, not on the backs of renters. We are also very concerned that HUD chose to circumvent the normal rulemaking process."

In April, HUD announced that it had run out of credit subsidy, resulting in the shutdown of FHA rental housing programs. As a result, the development of more than 50,000 desperately needed rental units in 33 states and the District of Columbia has come to a halt. This shutdown comes at a time when, according to a National Housing Conference report published last year, one out of every seven American families-13.7 million households-faces a critical housing need by paying more than half of its income for housing or living in severely inadequate housing.

In an attempt to avert a crisis in the production of affordable rental housing, Congress approved in December $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 HUD have not acted to invoke the emergency provision necessary to release the funds-despite requests from members of Congress and the housing industry.

The MBA and NAHB are committed to working with HUD and others to develop long-term solutions that improve the FHA multifamily programs and increase the supply of affordable rental housing.

"FHA's multifamily 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 next year's budget and fund enough credit subsidy to meet the demand in fiscal 2002."


About MBA
The Mortgage Bankers Association of America 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

About NAHB
The National Association Of Home Builders is a Washington-based trade association representing more than 203,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the more than 1.5 million new housing units projected for 2001. During a typical year, residential construction accounts for about five cents of every dollar spent in the U.S. economy, making home building one of the largest and most influential industries in the country.

FOR IMMEDIATE RELEASE

CONTACTS:
David Warner,
Mortgage Bankers Assoc. of America
(202) 557-2843

Jay Shackford,
National Association of Home Builders
(202) 822-0406
[email protected]
http://www.nahb.com/news/default.htm

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