FHA Multifamily Loan Limit Adjustment Act of 2009

Mr. Speaker, I rise in support of the FHA Multifamily Loan Limit Adjustment Act. I see that Mr. Weiner is just walking in the door right now, so we're going to be able to have a very nice conversation. Welcome, Mr. Weiner. I'm very glad to have you. I'm honored to support your bill. This addresses the need for new construction or substantial rehabilitation to multifamily units in extremely high-cost areas of the country.

The FHA multifamily mortgage insurance program works with private sector partners to expand the supply of rental housing. FHA's multifamily mortgage insurance programs enable qualified buyers to obtain long-term, fixed-rate, nonrecourse financing for multifamily properties that are affordable to low- and moderate-income families. These families include police, firefighters, teachers, entry and mid- level service workers, among others.

In our most expensive cities it is very difficult for these workers, particularly those starting out in the workforce, to find affordable rental housing where they work. While the FHA multifamily mortgage insurance program could help, because of its loan limits there were only three FHA-insured multifamily loans for high-rise construction or rehabilitation approvals in the Nation in fiscal year 2007 and 2008.

According to the Mortgage Bankers Association, MBA, while the base loan limits and high-cost factors have been raised over the past 8 years to address issues in most parts of the country, there's still problems concentrated in major cities where high-rise construction is involved. In fact, the data shows that while elevator buildings cost 45 percent more than non-elevator structures, the current loan limits for these structures are less than 10 percent higher than non-elevator structures.

Developers are simply unable to provide affordable housing units in high-cost areas because the current statutory limits for FHA mortgage insurance are too low for these types of structures.

The slowdown in affordable rental housing production that is being enhanced by the credit crisis has resulted in a significant gap between the demand for and the supply of affordable rental housing.

There is no private sector alternative to this program. The market served by FHA multifamily insurance does not overlap with competing private sector insurance.

This bill would increase the multifamily loan limit for elevator buildings by up to 50 percent and give the Secretary of HUD the authority to increase the limit in extremely high-cost areas to 305 percent of the base rate; similar to insurance of mortgages on property in States like Alaska, Guam, Hawaii, and the Virgin Islands. And I think Mr. Weiner and I agree--if it's good enough for Alaska, Guam, Hawaii, and the Virgin Islands, it's good enough for the rest of the United States.

This program has a positive budgetary impact. Now this does not cost the Federal Government any money. Making money for the taxpayers is what we're looking at.

Looking at the President's fiscal year 2010 budget, the multifamily insurance programs that relate to these loans limits is projected to make a profit--I repeat, a profit--on new loans insured in the fiscal year budget of $93 million. In fact, over the years, FHA multifamily loans have consistently made a profit for the taxpayers.

Under the bill, 52 projects with over 11,000 units valued at $3 billion that are on hold will be able to move forward by using the FHA program. In Los Angeles alone, five multifamily projects for 1,700 units that are stalled due to the loan limits would be able to move forward. The National Home Builders Association has predicted that with the passage of this bill, 12,000 new construction jobs will be created.

Over the past 74 years, the FHA multifamily mortgage insurance program has operated successfully, working with private sector parties to expand the supply of housing. This public-private partnership has leveraged billions of dollars in private sector investment to provide rental housing for millions of families and the elderly throughout the country.

The bill is endorsed by the Mortgage Bankers Association, the National Association of Home Builders, the National Association of Realtors, the Institute of Real Estate Management, and 10 others.

I want to commend Chairman Frank and Ranking Member Bachus for sending this bill to the floor.

I reserve the balance of my time.

I thank Mr. Weiner for bringing this bill forward. It's very reminiscent of what happened to California with FHA and with conforming loan limits to high-cost areas. And I represent a high-cost area.

My FHA loans from 2000 to 2005 dropped by 99 percent. Today, we've raised conforming loan limits in high-cost areas for FHA for conforming, and over 90 percent of the loans made in my area today of California, and most of California, are conforming in FHA loans.

This, again, addresses a loophole that has existed for years. If it's good enough for Alaska, Guam, Hawaii, and the Virgin Islands, which I think it is, it's good enough for the other high-cost areas of this country.

I yield back the balance of my time.

I thank the gentleman from New Jersey and my good friend from California, who has done an excellent job in explaining the bill. Let me just make a couple of general points that my colleagues can understand.

You know, unlike a lot of the housing market, FHA loans have actually performed remarkably well. Some people may look to the floor today and say, Why would you want to do anything to expand lending when we have already seen some of the problems that we've had? Well, frankly, FHA only has a serious delinquency rate of about .3 percent, compared to nearly 8 percent in the rest of the marketplace.

But to understand how FHA has worked so well, what they essentially do is take people who are essentially developing rental housing. They say, You're having trouble getting credit elsewhere, like it was when they were created after the Great Depression. We'll go ahead and provide you credit to provide rental housing that you can rent to middle-class residents all around the country.

Unfortunately, what was never truly acknowledged by the program until now is that some parts of the country have rental housing that doesn't go side-to-side, but goes north and south, up and down. Congressman Miller has instances like that. I know I do in New York City.

By definition, elevator buildings, combined with the fact that they are in big cities, make them more expensive. And so what we're saying here is, let's make sure the program keeps up with the real demand that we have for housing.

Now it is imperative that we do this because, despite the best efforts of this Congress and the President, the banks are simply not doing what we wanted them to do, which is extend more credit so people who have good enough credit can go ahead and find apartments that they can rent, homes that they can buy.

FHA is going to, under this piece of legislation--and I thank my colleague from New Jersey for quarterbacking it--is going to have the opportunity now to change their standards to reflect the way different things are regionally.

I should say to all of my colleagues, if you're doing things to perfect farm programs, just because they don't benefit me in New York City doesn't mean I don't support them. This is a way to make housing programs reflect what truly is going on in the marketplace.

Let me make one other point about this. It is true what my colleague says about Guam and Alaska and Hawaii. They're high-cost areas for different reasons. They're high-cost areas because getting building supplies to Guam, getting building supplies to Alaska and Hawaii, those are expensive.

One of the things that makes housing expensive in areas like New York City is that you have got to install elevators in any building that's north of six stories. And if you wind up getting into that place, you wind up adding a great deal to the amount per square foot that is required to do the building.

Nothing, I should say to my colleagues, does anything here to put taxpayers in any more jeopardy. The FHA program is entirely self- funded. It's the premiums that are collected from people who benefit from the program. All we're doing now is stopping what is a bottleneck in the program that has said we've got a lot of moribund programs-- which is a word my assistant, Mr. Beckelman, who has developed this legislation, coined--these moribund programs that are ready to go but simply can't get the financing.

So this House will be doing what desperately needs to be done. I thank the chairman of the Financial Services Committee for quarterbacking it and for getting it--tailbacking it; you quarterbacked, he tailbacked it--and for Mr. Miller of California, who has helped see the importance of this, and want to thank him for the great work he has done.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3527) to increase the maximum mortgage amount limitations under the FHA mortgage insurance programs for multifamily housing projects with elevators and for extremely high-cost areas, as amended.

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

Mr. Speaker, I urge the House to pass H.R. 3527, the FHA Multifamily Loan Limit

Adjustment Act of 2009. By increasing the FHA loan limits to elevator properties in extremely high-cost areas, H.R. 3527 will allow the FHA to facilitate the construction and rehabilitation of apartments, particularly in urban areas, where financing is not readily available in the current economic environment.

I reserve the balance of my time.

September 14, 2009.

Hon. Nancy Pelosi,

Hon. John Boehner,

House of Representatives, Washington, DC.

Dear Madam Speaker and Minority Leader Boehner: The

undersigned groups are writing to urge the House to pass H.R.

3527, the FHA Multifamily Loan Limit Adjustment Act of 2009.

By increasing the FHA loan limits for elevator properties and

in extremely high-cost areas, H.R. 3527 will allow FHA to

facilitate the construction and rehabilitation of apartments,

particularly in urban areas where financing is not readily

available in the current economic environment.

The FHA multifamily loan limits are severely restricting

the ability to use FHA insurance programs to finance rental

housing in many urban areas. HUD data shows that, in fiscal

years 2007 and 2008, only three non-subsidized high-rise

construction/rehabilitation projects--nationwide--have been

endorsed for insurance with FHA. We believe this is largely

due to the maximum loan limits imposed by statute on the FHA

insurance programs, which is being addressed in H.R. 3527.

A recent survey of major lenders shows that there are more

than 11,000 units in elevator structures with a mortgage

amount of more than $3 billion that are on hold and, when

H.R. 3527 is passed, should be able to move forward using the

FHA programs. These properties are in many urban areas across

the country, from Seattle and Los Angeles, to Houston,

Columbus and Chicago, to Boston and New York.

Decent affordable rental housing allows working families to

live in stable environments and within their means and also

allows seniors to live in communities with appropriate

amenities to permit aging in place. Well-maintained and

attractive rental housing in turn contributes to neighborhood

stability.

We urge the House to pass H.R. 3527 to provide FHA with the

tools it needs to facilitate the construction and

rehabilitation of apartments.

Sincerely,

American Association of Homes and Services for the Aging;

Enterprise Community Partners; Institute of Real Estate

Management; Mortgage Bankers Association; National

Apartment Association; National Affordable Housing

Management Association; National Association of Home

Builders; National Association of Local Housing Finance

Agencies; National Association of Realtors; National

Housing Conference; National Leased Housing

Association; National Low Income Housing Coalition;

Nation Multi-Housing Council; New York Housing

Conference; Stewards of Affordable Housing for the

Future.

Mr. Speaker, I yield such time as he may consume to the sponsor of the bill, the gentleman from New York (Mr. Weiner).

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

I thank the gentlemen for their leadership on this bill, and I rise in support of it.

Also, I just missed the FHA Multifamily Loan Limit Adjustment Act of 2009. This would create jobs, address the issue of affordable rental housing, and fix the lingering problems with better financing and liquidity. It would turn the hopes of homeownership into a reality and raise the limits on FHA loans that will help build more housing.

I rise today in support of a bill that will: Help create jobs in the hard-hit construction trades; address the longstanding issue of affordable rental housing in major urban and rural centers; and help fix lingering problems with better financing and liquidity.

H.R. 3527, the FHA Multifamily Loan Limit Adjustment Act of 2009 does all that and more, so I am proud to be a cosponsor along with my colleagues, Representatives Weiner, Miller and Frank.

The FHA's current limits on multifamily loans were certainly well intentioned, but they significantly restrict the ability of developers to use FHA insurance programs to finance badly needed affordable rental housing in high-cost areas such as New York City and State. In 2007 and 2008, HUD data shows that only 3 non-subsidized high rise construction or rehabilitation projects received FHA insurance approval in the whole country!

That's in part because the current FHA multifamily loan maximum of $68,070 per two-bedroom unit is simply not high enough in high-cost areas. This puts a damper on new construction and badly needed rehabilitation in urban and suburban areas--where construction costs are higher.

But by simply increasing the loan limit as this bill does to $93,029, FHA can facilitate construction and rehabilitation of apartments where financing is not available. I am told that there are currently 11,000 units in elevator structures across the country on hold with a combined mortgage amount of more than $3 billion. In New York City, there are a total of 14 projects worth $628 million stalled in NYC. This would build 2088 rental units in Brooklyn, Manhattan, and Queens.

When this bill becomes law these construction projects can move forward, create jobs and build new and more affordable homes.

In order to thrive our major cities depend on a supply of decent rental housing in buildings that are well maintained. Let's give the FHA the tools they need to move forward and enable these projects, these jobs, these American dreams.

I urge my colleagues to support this important legislation.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2947) to amend the Federal securities laws to make technical corrections and to make conforming amendments related to the repeal of the Public Utility Holding Company Act of 1935.

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

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

I rise today in support of H.R. 2947, the Securities Law Technical Corrections Act of 2009, drafted by my colleague from Kansas, Congresswoman Lynn Jenkins. I commend her work on this bill, Mr. Speaker.

During the 110th Congress, a nearly identical bill, H.R. 3505, sponsored by Congressman Peter Roskam of Illinois, passed the House by a vote of 396-0. The Senate never acted on the measure.

This bill would effectively exclude companies that were subject to regulation under the Public Utility Holding Company Act of 1935, which was repealed in 2005, from the definition of investment company and from the definition of securities laws.

Again, I commend Congresswoman Jenkins for sponsoring this legislation, and I urge my colleagues to support it.

I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Mrs. Maloney).

(Mrs. MALONEY asked and was given permission to revise and extend her remarks.)

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

Mr. Speaker, I urge my colleagues to support