The Mortgage Bankers Association (MBA) has praised Senate passage of HR 5872, General and Special Risk Insurance Funds Availability Act, a bill to increase the Federal Housing Administration's (FHA) multifamily commitment authority, and HR 5981, which would allow FHA to increase its annual premiums for its single-family program. Both bills have passed the Senate and will now go to the President for his signature.
HR 5872, which passed the House of Representatives last week, increases FHA's commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. Without this increase, FHA would have exhausted its current authority sometime in mid-August and would have been forced to stop issuing any commitments to insure the loans in their current pipeline of applications until the next fiscal year, which begins Oct. 1.
"FHA's multifamily programs have been a critical source of funding to build and renovate multifamily and rental housing during the recent credit crunch," said Robert E. Story Jr., CMB, Chairman of MBA. "MBA has been working tirelessly with officials at FHA and on Capitol Hill to help keep the program up and running and we are gratified that Congress acted before a shutdown became reality."
HR 5891, will permit FHA to increase its annual premiums, raising the statutory cap from 0.55 percent to 1.55 percent. The legislation is nearly identical to one of the key provisions of the broader FHA Reform Act, which passed the House in June but has yet to be considered by the Senate. The House had passed HR 5891 last Friday, July 30.
"While premium increases are never ideal, this bill was necessary to help improve the strength and stability of FHA's single family programs," said Story. "We are encouraged that FHA Commissioner Stevens has indicated he may not need to raise premiums to the maximum, and we believe that that a small increase in the annual premium, coupled with a decrease in FHA's upfront premium, will help stabilize FHA while lowering closing costs for many borrowers."
In October, MBA established an executive-level task force, including both single family and multifamily lenders, to help shape policy recommendations to ensure FHA can continue to fulfill its crucial mission in an evolving mortgage marketplace. MBA's Council on the Future of FHA has spent the last six months looking at the critical issues facing FHA and Ginnie Mae, and will be releasing its recommendations in the near future.
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