Testifying before a House Financial Services Subcommittee on behalf of the National Multi Housing Council (NMHC) and the National Apartment Association (NAA), Rick Mosytn today told lawmakers that the Federal Housing Administrations (FHAs) multifamily housing programs are a critical resource to private-sector developers and investors and the future health of the rental housing market.
FHA has been a cornerstone for construction and permanent financing and refinancing for apartments for over 50 years and needs to remain a viable market participant to meet future housing needs, said Mostyn, who is the Vice Chairman and Chief Operating Officer of The Bozzuto Group.
Mostyn went on to highlight three issues regarding FHAs multifamily programs that could restrict market liquidity and reduce access to capital: changes to capital requirements for new construction ” especially for larger loans, modifications to borrower credit requirements and a continued backlog of loans due to processing.
NMHC/NAA strongly support FHAs efforts to introduce sound credit and underwriting policies, but there are areas in which improvements can be achieved, said Mostyn. We would like to commend HUD Secretary Shaun Donovan, FHA Commissioner Carol Galante and Deputy Assistant Secretary Marie Head for their demonstrated willingness to work with stakeholders in this regard.
In normal economic times FHA plays a limited role by offering construction financing to developers, as well as loans to borrowers who lack access to bank and other private construction capital sources. During the economic crisis, demand for FHA multifamily financing surged from $2 billion to $10 billion annually ” putting significant pressure on FHAs ability to handle the added volume.
At the same time, the countrys demand for apartment living far outstrips the industrys ability to meet this need. The industry broke ground on 167,000 units last year, barely half of the 300,000 units necessary annually just to meet anticipated demand.
We remain committed to working with FHA on outstanding issues associated with maximizing the industrys access to FHA credit, improving the application process and addressing credit risk, which is in the mutual interest of the industry and the taxpayer, said Mostyn.
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