Senate Approves Increase in FHA Apartment Loans
- Aug 06, 2010
The U.S. Senate last night passed H.R. 5872, which increases the Federal Housing Administration’s commitment authority for its multi-family insurance programs by $5 billion. The bill, passed by the House of Representatives last week, now goes to the President for approval.
The increase is much needed, according to the Mortgage Bankers Association, which has been pushing for passage of the bill. Without it, the FHA’s authority would have been exhausted in mid-August, with the new fiscal year not beginning until Oct. 1. Meanwhile, the application flow for FHA insurance has been “very, very strong” in the current economy, Christopher Tawa, senior advisor to the deputy assistant secretary for multi-family housing, recently told CPE—to the point where, coupled with a lack of growth in staffing, the result has been a backup in process time.
The FHA has been taking steps itself to strengthen its program, specifically with a recent tightening of terms to bring them up to the level of the private market. Indeed, the standards have not been changed for 40 years, he noted, although market conditions and borrower structures have changed dramatically. And the FHA will remain the highest-leverage lender in the marketplace with the most flexible terms and the only one offering non-recourse construction loans.
Along with H.R. 5872, the Senate passed H.R. 5981, which increases annual premiums for the FHA’s single-family program.