A House subcommittee has passed a law that would allow for higher Federal Housing Administration loans on multifamily housing.
HR-1985, the FHA Multifamily Loan Limit Adjustment Act of 2003, was approved by a voice vote in the House Financial Services Housing Subcommittee.
The committee heard testimony from several witnesses before approving the bill, including Linda Cheatham, senior vice president of Berkshire Management Finance, who spoke on behalf of the Mortgage Bankers Association of America (MBA) in favor of the bill.
"Clearly, without higher FHA multifamily loan limits in high-cost markets, critical housing needs will go unmet," she said to the subcommittee. "Those who will be most affected will include low- and moderate-income families, including important community service providers such as teachers, firefighters, and police officers. By increasing the maximum loan limit for FHA’s multifamily programs, these programs can help provide the housing opportunities necessary for the economic and social well being of our nation."
Complete witness testimony is available on the committee's website.
According to the press release issued by the subcommittee, the bill will increase affordable housing availability.
Howard Earl Cohen, president of Beacon Companies Limited Partnership, said that his company has trouble getting financing for projects in Boston because of the severe nature of the current limits. He spoke in favor of the bill.
"The passage of HR 1985 would revive FHA as viable tool in our region, which would contribute to a reduction in our costs of financing and thus the overall cost of producing housing. Enactment of HRE 1985 would be a significant federal contribution to this effort at no additional cost to the federal government," he said.
In the statement released by the subcommitte, bill sponsor, Rep. Gary G. Miller (R-CA) said, "Raising multifamily loan limits in high-cost areas is important because there are markets where construction costs are so high that the current loan limits are insufficient. This makes it difficult or impossible to use the FHA program, especially in high-cost markets, such as my district, where construction costs are significantly higher than in other areas of the country."
Casimir Kolaski, speaking for the National Association of Home Builders, concurred that the bill would improve prospects for moderate- to low-income housing.
"With unemployment rising and wages not keeping pace with rising rents, it’s especially important that the program be available to provide much-needed affordable housing to our cities’ working families and individuals.
There are few, and often no, alternatives in the market available to them," he said.
The bill, if passed, will allow for higher loan limits in high-cost areas. Currently, the loans can go to 110 percent of FHA limits, if approved. The bill would make that number 170 percent.
The assistant secretary of the Department of Housing and Urban Development testified before the committee and urged caution in increasing the loan limits. He pointed out that rental vacancies are at their highest in forty years and that increasing limits could be risky.
"Increases in FHA loans limits must be carefully scrutinized for their net impact on affordable housing and these benefits must be weighed against any increased risk that the FHA Fund would face," secretary John C. Weicher said.