[Congressional Record Volume 149, Number 140 (Tuesday, October 7, 2003)]
[House]
[Pages H9235-H9237]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FHA MULTIFAMILY LOAN LIMIT ADJUSTMENT ACT OF 2003
Mr. NEY. 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.
The Clerk read as follows:
H.R. 1985
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``FHA Multifamily Loan Limit
Adjustment Act of 2003''.
SEC. 2. MAXIMUM MORTGAGE AMOUNT LIMIT FOR MULTIFAMILY HOUSING
IN HIGH-COST AREAS.
In the National Housing Act, sections 207(c)(3),
213(b)(2)(B)(i), 220(d)(3)(B)(iii)(II), 221(d)(3)(ii)(II),
221(d)(4)(ii)(II), 231(c)(2)(B), and 234(e)(3)(B) (12 U.S.C.
1713(c)(3), 1715e(b)(2)(B)(i), 1715k(d)(3)(B)(iii)(II),
1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 1715v(c)(2)(B)),
and 1715y(e)(3)(B)) are each amended--
(1) by striking ``110 percent'' and inserting ``170
percent''; and
(2) by striking ``140 percent'' and inserting ``170
percent''.
SEC. 3. CATCH-UP ADJUSTMENTS TO CERTAIN MAXIMUM MORTGAGE
AMOUNT LIMITS.
(a) Section 207 Limits.--Section 207(c)(3) of the National
Housing Act (12 U.S.C. 1713(c)(3)) is amended by striking
``$11,250'' and inserting ``$17,460''.
(b) Section 213 Limits.--Section 213(b)(2)(A) of the
National Housing Act (12 U.S.C. 1715e(b)(2)(A)) is amended--
(1) by striking ``$38,025'', ``$42,120'', ``$50,310'',
``$62,010'', and ``$70,200'' and inserting ``$41,207'',
``$47,511'', ``$57,300'', ``$73,343'', and ``$81,708'',
respectively; and
(2) by striking ``$49,140'', ``$60,255'', ``$75,465'', and
``$85,328'' and inserting ``$49,710'', ``$60,446'',
``$78,197'', and ``$85,836'', respectively.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Ney) and the gentleman from Massachusetts (Mr. Frank) each
will control 20 minutes.
The Chair recognizes the gentleman from Ohio (Mr. Ney).
General Leave
Mr. NEY. 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.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. NEY. 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.
Mr. FRANK of Massachusetts. 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.
{time} 1530
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.
[[Page H9236]]
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.
Mr. NEY. 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.
Mr. GARY G. MILLER of California. 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. FRANK of Massachusetts. 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.
Mr. NEY. 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
[[Page H9237]]
not pass both Chambers, has been an approach we have taken so we can
get bits and pieces of bills that are good bills.
Mr. FRANK of Massachusetts. Madam Speaker, will the gentleman yield?
Mr. NEY. I yield to the gentleman from Massachusetts.
Mr. FRANK of Massachusetts. 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.
Mr. NEY. 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.
The SPEAKER pro tempore (Mrs. Capito). The question is on the motion
offered by the gentleman from Ohio (Mr. Ney) that the House suspend the
rules and pass the bill, H.R. 1985, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________