|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."