FHA Multifamily Loan Limit Adjustment Act of 2003

Madam Speaker, I rise in support of H.R. 1985, the FHA Multifamily Loan Limit Adjustment Act of 2003. This legislation is really critical to make sure we provide affordable rental housing in this country.

I applaud the gentleman from Massachusetts (Mr. Frank). He and I have a passion on this issue. We have been working on this for a while, and we continue to look for areas that we can impact in this country to make sure that housing is available to those who need housing most. I think our goal is to make sure that everybody in this Nation has an opportunity to own or rent their own home, a place they can call theirs.

I would like to commend the chairman of the Committee on Financial Services, the gentleman from Ohio (Mr. Oxley), for his efforts in this. The gentleman from Ohio (Chairman Ney) has been very, very good about making sure that this was diligently processed through the committee, and I want to thank him very much for that.

When it comes to high-cost markets, where land and construction costs are significantly higher than in other areas in the country, there is no question that FHA multifamily mortgage insurance limits are not keeping pace. The fact is that in high-cost areas, the land is continually growing in value. People are actually able to auction it off, and the rates they are getting for it are increasing rapidly, and the construction costs are increasing the same way.

The slowdown in affordable rental housing production has resulted in a significant gap between the demand for and the supply of rental housing. This is a problem we have to come together to solve today.

The FHA Multifamily Program provides mortgage insurance for multifamily developments, particularly serving low- and moderate-income families. In our most expensive cities, it is very difficult for these families to find affordable rental housing in the communities where they work. Today, many public servants in my district, police officers, firefighters and teachers, are not able to live in the community in which they grew up and work today. And if Congress does not act to promote affordable rental housing, things will not get easier for families in my district and the Nation as a whole.

Orange County, California, had the third largest rent increases out of 25 of the largest metropolitan areas in 11 Western States. Thirty- three percent of the renters in Orange County sent 35 percent or more of their income to their landlord.

The FHA Multifamily Mortgage Insurance Program has operated for over 65 years, working with private sector partners to expand the supply of rental housing. This public-private partnership has leveraged more than $100 billion of private sector investments to provide rental housing for more than 4 million families and the elderly throughout this country.

The problem is that, according to HUD's data, no multifamily loans were FHA insured in high-cost cities such as New York, Philadelphia, Seattle or Los Angeles in 2003. The entire State of California only had one multifamily development that has been built and insured by FHA. These are the same areas of the country in which there exists a wide availability gap of affordable rental housing.

The problem is in California and many high-cost States, Massachusetts is a great example, you cannot find a rental available. They are just not available. The costs are escalating so rapidly.

The developers are simply unable to provide affordable housing units in these areas because the current statutory mortgage limits for FHA mortgage insurance are unrealistically low. We have to get the rates up to keep up with the demand out there.

I have a letter from an individual who is a developer in the Boston area, and this gives you an example of what developers are going through today in this country.

He said, ``I am currently in the planning stages of developing 180- unit, garden-style, walk-up apartments located in Burlington. Twenty percent of the units will be affordable to seniors with incomes of 80 percent of the area median, and the rest will be at market rate. The units range in size from 700 square feet, one-bedroom units to 1,200 square foot, two-bedroom units.''

He has been planning this for quite a few years.

``However, I may not be able to actually obtain the FHA-insured loan. My total development costs are $176,000 per unit, which exceeds the high-cost limits. The figure is actually somewhat low because I bought the lands many years ago for $15,000 per unit. The land is currently worth $50,000 per unit.''

In nexus, what this gentleman is saying is if he cannot get this loan, which is not competing with the private sector, it is a loan for FHA for these income houses, he is likely to have to sell this property off to a developer who will not build it for low-income people, who will build it for at-market rates, whether it be multifamily, condos or townhomes. The problem is that does not do anything to remove the problem we face today, but makes it worse.

We are not giving grants and that is the key, the gentleman from Massachusetts (Mr. Frank) tried to say. This is not a government giveaway. Whether you are a conservative or a liberal should not impact anybody. This is a loan that is made to an individual that is a very safe loan. In fact, the government makes money off these loans.

It is very seldom we can bring a bill to this floor that not only deals with the housing crisis we face in this country, but actually does not cost the government a dime. Nobody is given anything, it is just a conduit between the builder and the people who need a place to live.

This is a good bill, I see no objection to it, and I ask for unanimous approval of this.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1985) to amend the National Housing Act to increase the maximum mortgage amount limit for FHA-insured mortgages for multifamily housing located in high-cost areas, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and to insert extraneous material on this legislation.

Mr. Speaker, I yield myself such time as I may consume.

Today I rise in support of H.R. 1985, the FHA Multifamily Loan Limit Adjustment Act of 2003. This important piece of legislation introduced by the gentleman from California (Mr. Gary G. Miller) and the gentleman from Massachusetts (Mr. Frank) amends the National Housing Act to increase the maximum mortgage amount limit for FHA-insured mortgages for multifamily housing located in high-cost areas.

The Federal Housing Administration is one of the most effective programs in helping low-to-middle-income buyers purchase their first home. It was originally designed to encourage lenders to make credit more readily available and at lower rates. Through FHA programs, HUD insures mortgages and loans made by HUD-approved lenders for a wide variety of purposes including new construction, rehabilitation, property improvement, and refinancing in connection with a wide variety of types of property. FHA programs include all types of residential property (multifamily, single family, manufactured homes), nonresidential commercial property, hospitals, and certain other health care facilities.

The FHA multifamily mortgage insurance program is a critical source of financing for affordable multifamily rental housing. During the previous 2 years, Congress supported and implemented improvements to the program, including increasing the base loan limits by 25 percent and indexing the loan limits to inflation, which begins in 2004. As a result, loan values have increased significantly in many areas of the country where the program previously, frankly, was not working.

However, there are a number of high-cost urban markets such as New York, Boston, San Francisco, Chicago, and Los Angeles where construction costs are significantly higher than other areas of the country, and the high-cost factors have not been sufficient to allow the use of FHA multifamily mortgage insurance programs. The FHA Multifamily Loan Limit Adjustment Act of 2003 will give the HUD Secretary the discretion to increase the maximum mortgage amount limit for FHA-insured mortgages for multifamily houses located in high-cost areas. In addition, it would change the statutory maximum adjustment percentage for geographic areas from 110 to 170 percent, which would change HUD's maximum high-cost percentage to 270 percent.

Providing the HUD Secretary additional flexibility to increase the maximum loan limits in high-cost areas would greatly improve the FHA multifamily mortgage insurance programs. With severe shortages of affordable rental housing in most of the high-cost markets, this change would enable developers to provide much-needed new affordable housing to low- and moderate-income families.

This is a tremendous bill, Mr. Speaker, and I want to give credit again to the gentleman from California (Mr. Gary G. Miller) and the gentleman from Massachusetts (Mr. Frank), the gentleman from Ohio (Chairman Oxley) and the staff on both sides of the aisle. It is a good bill. It is a bill that will definitely help people in the United States, and I would urge all of my colleagues to support this vital housing initiative.

Mr. Speaker, I reserve the balance of my time.

Madam Speaker, I yield 5 minutes to the gentleman from California (Mr. Gary G. Miller), the sponsor of this bill, who has literally traveled 2000 miles to be here for this bill today.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, in closing, I want to again commend the gentleman from California (Mr. Gary G. Miller) and the gentleman from Massachusetts (Mr. Frank), who worked together on a very important piece of legislation, our ranking member, the gentlewoman from California (Ms. Waters), and the gentleman from Ohio (Chairman Oxley). Our Subcommittee on Housing and Community Opportunity put this straight to the full committee so we did not delay on it.

I also want to note something, and the gentleman from Massachusetts (Mr. Frank) talked about it, omnibus bills. I think the approach we are taking on the committee, both the subcommittee and the full committee, is the right approach. We are looking at high-cost. Somebody said, what are you doing for rural? We are doing things for rural. We are discussing everything on the table.

Avoiding an omnibus bill, that everybody works a year on and then it does

not pass both Chambers, has been an approach we have taken so we can get bits and pieces of bills that are good bills.

I yield to the gentleman from Massachusetts.

Madam Speaker, reclaiming my time, we can still work an omnibus bill, and we can still continue to do these. These are probably going a little faster, I hope. But an omnibus will keep us all busy.

With that, I urge support of the bill.

Madam Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I am particularly appreciative of the efforts of the gentleman from Ohio, the chairman of the Subcommittee on Housing and Community Opportunity and the other gentleman from Ohio, who chairs the full committee, for helping us bring this bill forward.

The gentleman from California and I began our collaboration on this issue in a previous Congress when this came up as part of an omnibus housing bill, and while we bogged down on that omnibus bill because of some differences between the parties and ideological concerns, it struck us that there was no reason to hold back on something that ought to be, and we believe is, in fact, in everybody's interest with no downside.

I would note that this is one of those times when we can bring forward a bill that will advance an important social purpose dealing with our housing affordability crisis, and this is not for subsidized housing, but as we build housing, multifamily housing, as we increase the housing stock, we deal with the affordability problem because there is a problem here of supply and demand. The affordability program is exacerbated by a shortage of supply, and as we increase the supply even of conventional housing, we are dealing with that.

This also has the unusual aspect of probably helping to reduce the Federal deficit. FHA premiums, given the repayment rate, particularly when we are dealing at this end of the spectrum, make money for the Federal Government. So if this has any impact on the Federal budget, it will be a directly positive one, not simply an economic activity that will be generated, that housing will be built, but specifically in the collections that will come from the FHA.

We do not have a single housing market in this country. We have, for a variety of reasons, some areas which cost more than others. Those are both supply- and demand-related factors. We should not, therefore, have a single FHA rule. Where we are dealing with high-cost areas, given the value that the FHA has as a financing mechanism for housing, we ought to take advantage of that.

I want to express my appreciation also to the gentleman from California (Mr. Gary G. Miller) for his consistent leadership on this issue. I would also like to acknowledge the role that the National Association of Homebuilders played in helping educate all the Members to the importance of this and to the benefit which we will all receive from it.

So I again express my appreciation to Members on the majority side, the lead sponsor of the bill, the gentleman from California (Mr. Gary G. Miller), the chairman of the subcommittee, the gentleman from Ohio (Mr. Ney), and the chairman of the full committee, the gentleman from Ohio (Mr. Oxley).

I am very pleased we will be moving this bill, and I hope that it is one that can be signed before the end of the year. I reserve the balance of my time.

Madam Speaker, I yield myself 1 minute to make one other point.

Even with regard to Section 8, this is helpful legislation, because the Section 8 cost is based on the cost of the housing. To the extent we can get multifamily housing built more efficiently with financing help, then the Section 8 rent, even in one of those units, which could happen, would be nice. So this is a bill which, as I said, has no downside.

I appreciate the gentleman from California noting he and I will continue to look for ways without regard to ideological party differences, which will remain and which are legitimate and which we will debate, but aside from those, we can find ways to move this along.

So, again, with thanks, particularly to the gentleman from Ohio who worked very hard on this, I urge passage of the bill.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, will the gentleman yield?

Madam Speaker, I thank the gentleman very much, and I agree with almost everything he said today, but only almost. I would still like to see an omnibus bill.