[Congressional Record (Bound Edition), Volume 149 (2003), Part 18]
[House]
[Pages 24233-24235]
[From the U.S. 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.

[[Page 24234]]

  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.
  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

[[Page 24235]]

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 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.

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