The mortgage industry would benefit from an increase in multifamily loan volume for Federal Housing Administration (FHA)-backed loans, and the U.S. Department of Housing and Urban Development (HUD) would be able to facilitate that by ditching rules and requirements without upping the risk for lenders.
This is according to a letter submitted to HUD Secretary Scott Turner by the Mortgage Bankers Association (MBA). This followed a recent meeting between association leaders and Turner’s multifamily staff at a recent MBA event, where Turner was a featured speaker.
Streamlining multifamily mortgage requirements would be a helpful factor in meeting the Trump administration’s stated goal to lower housing costs, particularly based on one of the president’s day-one executive orders.
“Over the past several decades, changes in underwriting requirements for FHA multifamily loans have proliferated,” MBA president and CEO Bob Broeksmit said in the letter.
“Many of these changes have come in areas that are unrelated to the risk of the loan but instead have fulfilled other policy goals that add expense and complicate and hinder the production of quality housing for the American people.”
FHA multifamily financing not only helps to increase housing accessibility but also provides funding for the U.S. Treasury, Broeksmit said.
But with FHA multifamily volume down “dramatically,” targeting “unnecessary rules and requirements that do not have a basis in the risk of the loan can greatly increase production and help alleviate the nation’s affordability challenges,” he added.
The 2020 Multifamily Accelerated Processing (MAP) guide dictated that HUD must comply with the National Environmental Policy Act (NEPA). But President Donald Trump issued an executive order on Jan. 28 that rescinded the implementing regulations from NEPA.
MBA also pointed out that “the Council for Environmental Quality (CEQ) subsequently rescinded its NEPA implementing regulations.”
These moves, Broeksmit said, would “streamline the development of quality rental housing.” The trade group attached a series of recommendations to the letter.
These include regulations regarding things like “acceptable separation distances” for buried underground pipelines, noise reduction requirements that MBA said can limit construction near transit centers, and guidelines governing the determination of falling hazards.
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