The Federal Housing Administration (FHA) insured a record volume of multifamily housing program loans in addition to making several changes to attempt retaining strength in this sector through 2004.
At the 90th annual Mortgage Bankers Association of America convention, FHA commissioner John C. Weicher said the administration insured $8.9 billion worth of multifamily mortgage loans during the fiscal year 2003, topping the prior fiscal year's record by 10%.
"The reason for that is our refi business," said Weicher. Section 221 (d)(4) refinancings accounted $2.9 billion of the total -- almost double compared to the prior year. But, d4 production housing projects dropped from $2.8 billion to $2.2 billion.
Section 221 (d)(4) is used by profit-motivated sponsors and it insures mortgage loans to facilitate the new construction or rehabilitation of multifamily rental or cooperative housing for moderate-income families, elderly, and the handicapped, according to the U.S. Department of Housing and Urban Development (HUD) Web site.
Out of the 89,000 multifamily housing units the FHA insured, 33,000 were new d4s, added Weicher.
A change in multifamily programs included lower premiums -- 57 basis points to 50 -- on d4s, which became effective in October, said Weicher. And, each October a revised premium will become effective as the administration will perform a yearly analysis of multifamily program operations to avoid past FHA procedures that added appropriations to premiums to continue operating the programs.
Contrary to previous FHA beliefs, the administration can have these lower premiums with "no limit on our business" and will save buyers a few hundred dollars through 2004, he added.
FHA also revised Chapter 15 of the Multifamily Accelerated Processing (MAP) guide. According to the HUD Web site, the change basically enforces further quality assurance on the documentation MAP-approved lenders perform when submitting loans for mortgage insurance.
"We've also started a formal rulemaking process for the guide revision," said Weicher. "We think that will help to do business with us as well."