"This important housing bill, which cleared the Senate two weeks ago and will be signed into law shortly by President Bush, will spur badly needed apartment construction in such major markets as Boston, San Francisco, Los Angeles, Chicago, and New York. It will also help tens of thousands of working families to become new home owners," said Jerry Howard, executive vice president and CEO of NAHB.
According to the association, the Federal Housing Administration (FHA) multifamily mortgage insurance program is a critical source of financing for affordable multifamily rental housing. This legislation will raise the loan limits in high-cost markets, enabling multifamily builders there to use the program to finance affordable rental housing.
The measure will boost limits for FHA-insured loans in high-cost areas to 140 percent above the program's base limit. The current limit is 110 percent. For special projects in high-cost areas, the HUD secretary will have the discretion to raise the maximum loan limit to 170 percent above the base.
The bill also authorizes $200 million annually to assist low- and moderate-income home buyers with down payment and closing costs, providing grants of roughly $5,000 to an estimated 40,000 home buyers annually.
In addition, the bill contains a provision designed to increase the use of the FHA's hybrid adjustable rate mortgages. These loans have a fixed interest rate for an initial period that is typically three, five, seven, or 10 years and then switch over to an adjustable rate. This is designed to enable more families to qualify for a home loan because the initial interest rate is lower than the rate on a conventional 30-year, fixed-rate mortgage.
Publicaiton date: 12/08/2003
