NAHB Meets with HUD FHA Commissioner to Discuss Changes to Key Programs
Last week, senior leadership of the National Association of Home Builders (NAHB) met with HUD’s Assistant Secretary for Housing/Federal Housing Administration (FHA) Commissioner, David H. Stevens, to begin ongoing discussions concerning proposed changes to HUD mortgage insurance programs that have become increasingly vital to the multifamily industry as traditional lenders dramatically reduced their lending to developers.
HUD’s changes to its Section 221(d)(4) and 223(f) programs, which were announced shortly after the International Builders Show in January, are in response to escalating default rates in HUD’s multifamily portfolio. Section 221(d)(4) is used for the new construction or substantial renovation of apartments, and Section 223(f) is used for the moderate rehabilitation and refinancing of apartments. FHA is concerned that existing credit risk management standards and approval processing for these programs may not appropriately reflect the needs of today’s economic environment and are therefore considering making significant changes to the programs’ underwriting standards.
View the proposed changes here.
“NAHB supports the FHA and its loan guarantee programs,” said NAHB’s CEO, Jerry Howard. “We recognize the need for these two programs to remain strong and viable options for multifamily developers now and in the future, and to make sure that the changes being considered do not make these programs so restrictive that they are no longer usable by our members. We look forward to working with FHA to strengthen these two vital housing programs.”
Commissioner Stevens said HUD will discuss the proposed measures thoroughly with the industry before implementing any changes. NAHB recently concluded review of the proposed changes, and is in the process of coordinating a follow-up meeting with HUD Deputy Assistant Secretary, Carol Galante, to discuss our concerns.
Exceptions to Condo Policy
Also during the meeting with FHA Commissioner Stevens, NAHB learned that HUD is developing a protocol for granting exceptions to its condo policy on a case-by-case basis, and would like input from NAHB members. HUD and NAHB will be holding a conference call for NAHB to provide our feedback. The condo policy changes were outlined in two mortgagee letters last year. The second letter, which is in effect until Dec. 31, 2010, temporarily increases the allowable FHA concentration in a project from 30% to 50% and decreases the pre-sale requirement from 50% to 30%.
For more information, contact Claudia Kedda at 800-368-5242 x8352.
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