[Congressional Record (Bound Edition), Volume 152 (2006), Part 15]
[House]
[Pages 20163-20166]
[From the U.S. Government Publishing Office, www.gpo.gov]




           FHA MULTIFAMILY LOAN LIMIT ADJUSTMENT ACT OF 2006

  Mr. GARY G. MILLER of California. Mr. Speaker, I move to suspend the 
rules and pass the bill (H.R. 5503) to amend the National Housing Act 
to increase the mortgage amount limits applicable to FHA mortgage 
insurance for multifamily housing located in high-cost areas.
  The Clerk read as follows:

                               H.R. 5503

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page 20164]]



     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``FHA Multifamily Loan Limit 
     Adjustment Act of 2006''.

     SEC. 2. MULTIFAMILY HOUSING MORTGAGE LIMITS IN HIGH COST 
                   AREAS.

       The National Housing Act is amended--
       (1) in sections 207(c)(3), 213(b)(2)(B)(i), 
     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), 
     1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 1715v(c)(2)(B), and 
     1715y(e)(3)(B))--
       (A) by striking ``140 percent'' each place such term 
     appears and inserting ``170 percent''; and
       (B) by striking ``170 percent in high cost areas'' each 
     time place such term appears and inserting ``215 percent in 
     high cost areas''; and
       (2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C. 
     1715k(d)(3)(B)(iii)(III)) by striking ``206A'' and all that 
     follows through ``project-by-project basis'' and inserting 
     the following: ``206A of this Act) by not to exceed 170 
     percent in any geographical area where the Secretary finds 
     that cost levels so require and by not to exceed 170 percent, 
     or 215 percent in high cost areas, where the Secretary 
     determines it necessary on a project-by-project basis''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Gary G. Miller) and the gentlewoman from California 
(Ms. Waters) each will control 20 minutes.
  The Chair recognizes the gentleman from California.


                             General Leave

  Mr. GARY G. MILLER of California. Madam Speaker, I ask unanimous 
consent that all Members may have 5 legislative days within which to 
revise and extend their remarks on this legislation and to insert 
extraneous material thereon.
  The SPEAKER pro tempore (Mrs. McMorris Rodgers). Is there objection 
to the request of the gentleman from California?
  There was no objection.
  Mr. GARY G. MILLER of California. Madam Speaker, I yield myself such 
time as I may consume.
  This legislation is critical to increasing the availability of 
affordable rental housing in this country.
  I would like to thank my good friend Barney Frank. He has worked with 
me to introduce this important bill. And I really want to thank the 
Financial Services Committee chairman, Mike Oxley. He has worked 
diligently through this process to get the process completed in 
committee so that the bill could be heard tonight.
  When it comes to high-cost markets where land and construction costs 
are significantly higher than other areas of the country, there is no 
question that the FHA multifamily mortgage insurance limits are not 
keeping pace. The slowdown in affordable rental housing production has 
resulted in a significant gap between the demand and supply of 
affordable rental housing. This is a problem we have come together to 
solve tonight.
  Through its numerous multifamily housing programs, HUD is a primary 
partner in the development of affordable rental housing. FHA provides 
mortgage insurance to HUD-approved lenders to facilitate the 
construction, substantial rehabilitation, purchase, and refinancing of 
multifamily housing projects and health care facilities. Mortgage 
insurance covers a lender if a borrower defaults on the insured loan. 
The FHA multifamily program is particularly important in serving the 
housing needs of 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 throughout this country, police officers, 
firefighters, and teachers, are not able to live in the communities in 
which they serve. Some commute an hour or more to get to work every 
day. What happens if there is a natural disaster? How will the first 
responders get to those in need in time if they live an hour or more 
away from where they work?
  If Congress does not act to promote the development of affordable 
rental units, the housing situation in high-cost areas will continue to 
worsen and the housing needs for those who serve our communities and 
keep them safe will continue to be overlooked. Developers are simply 
unable to provide affordable housing units in high-cost areas because 
the current statutory limits for FHA mortgage insurance are 
unrealistically low. While Congress increased the limits of 2003, 
construction costs have accelerated to such heights in high-cost areas 
that the limits need to be increased again in order to allow 
affordable, low- and moderate-income rental units to be built in places 
like California and New York and cities such as Boston.
  While FHA multifamily loan limits were increased in 2003, there were 
only a total of six FHA-insured multifamily loans for new construction 
or substantial rehabilitation approved in California in fiscal years 
2004 and 2005 because of the loan limit. For the same time frame in the 
State of New York, only eight multifamily projects were approved by 
FHA. In Massachusetts only five projects were approved, and in New 
Jersey not a single new construction or rehabilitation project was 
approved through FHA.
  This bill establishes a mechanism for addressing the need for new 
construction or substantial rehabilitation of rental units in extremely 
high-cost areas throughout this country. Under this bill, the 
multifamily loan limits in high-cost areas would increase to 170 
percent above the base limit. The Secretary of HUD would have the 
discretion to increase the limits to 215 percent on a case-by-case or 
project-by-project basis.
  It is important to point out that there is no private sector 
alternative to this program. The market served by FHA multifamily 
insurance does not overlap the competitive private interests. The FHA 
multifamily mortgage insurance program has worked with private sector 
partners to expand the supply of rental housing for over 65 years. This 
public/private partnership has leveraged more than $100 billion of 
private sector investment to provide rental housing for working 
families and elderly throughout this country.
  In addition, the FHA program and this increase pays for itself. In 
fact, the program actually has a positive budgetary impact. That means 
this project actually makes money for the Federal Government.
  For example, according to CBO, in 2002 FHA insured about $5 billion 
in loans for multifamily projects. The budgetary impact of these 
guarantees was accorded as discretionary savings of about $20 million. 
That means that the Federal Government made $20 million just by 
insuring these loans. CBO estimates that this bill would bring in $15 
million in 2007 and $75 million between the 2007-2011 period. That 
means in those years alone, the Federal Government will make $75 
million just by working on these programs.
  Further, let me point out that if we do not pass legislation to 
promote the availability of affordable rental housing, our waiting 
lists for public housing will continue to grow. Despite drastic funding 
increases in section 8, waiting lists continue to grow across this 
Nation. In some cities, such as those in Southern California, families 
who sign up on a waiting list today will not receive an apartment for 
another 10 years.
  This bill is a step in the direction of reducing dependency on 
government programs by providing a move-up market for affordable rental 
units.
  In closing, it is important to note that we are not giving grants. We 
are not doing something that is going to lose money for any 
congressional district, because this bill does not take away money from 
low-cost areas. This bill, basically with the FHA mortgage insurance 
program, provides a critically needed financing source for affordable 
rental housing. It is important that this program be usable in areas 
that are experiencing a severe shortage of affordable units and rising 
development costs.
  I want to conclude by saying this is not a giveaway program. This is 
a program that is an assistance to the private sector and a program 
that actually makes money for the private sector and through the 
government.
  Madam Speaker, I reserve the balance of my time.
  Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I rise in support of H.R. 5503, the FHA Multifamily 
Loan

[[Page 20165]]

Limit Adjustment Act. And I want to thank the sponsor of the bill, the 
gentleman from California (Mr. Gary G. Miller). I also want to thank 
the ranking member of the Committee on Financial Services, Mr. Frank, a 
sponsor of the bill; and our distinguished chairman, Mr. Oxley, for 
moving this legislation to the floor.
  This is yet another example of the progress that we as members of the 
Committee on Financial Services have made on housing matters. In 
committee we have passed many housing bills that are waiting 
consideration by the House, and I am privileged to have supported this 
bill and other legislation because it begins to address the affordable 
housing crisis that we confront in America.
  This bill is important to maintaining, as well as to increasing, the 
Nation's rental and affordable housing stock. FHA multifamily insurance 
products will remain available to assist projects for families with 
incomes from 80 percent to 150 percent of the median income. These are 
the people who really need our help. The bill will increase the loan 
limits for FHA-insured multifamily products in high-cost areas, where 
the FHA loan limits are no longer relevant in places like my district 
of Los Angeles, California. It is estimated to cost $146,240 per unit 
to build a 42-unit two-bedroom development in Los Angeles or 
approximately $6,142,069. In New York City and San Francisco, these 
projects are even more expensive, anywhere from $167,000 to $180,000 
per unit.
  This has had devastating effects on the construction of affordable 
housing projects in my district and elsewhere in the country, 
particularly as land and construction costs skyrocketed over the past 
few years.
  In 2005 FHA insured a total of six multifamily projects in 
California. New York fared no better, as only eight projects were built 
in the same year. Of course, I am not surprised by this trend. But it 
must be reversed because of the large numbers of persons seeking 
affordable rental housing in this country, many of whom are working 
families with children, the elderly, and the disabled.
  We all know that the affordable housing crisis has been exacerbated 
nationally since nearly 170,000 units of housing were lost last year in 
New Orleans alone as a result of the hurricanes that struck the gulf 
region. People of New Orleans and elsewhere in the gulf region are 
desperate for housing, which makes this legislation even more 
important. Very little, if any, multifamily rental housing has been 
constructed since the storms. Madam Speaker, I hope this bill reverses 
this situation.
  H.R. 5503 will allow HUD to increase multifamily loan limits in 
expensive areas to 170 percent above the base limit, while giving the 
Secretary of HUD the discretion to increase the limit to 215 percent on 
a case-by-case basis. Because there are approximately 100 areas in the 
country that would be characterized as high-cost areas, this bill 
recognizes the reality of multifamily housing construction in this 
country. It just disappeared. Without these changes to the loan limits, 
it will remain impossible for developers, both for-profit and 
nonprofit, to develop any affordable housing units. The current loan 
limits can actually be attributed in part to the shortage of affordable 
housing units, particularly in high-cost areas of the country.
  Now, as most of you know, there are no real alternatives in the 
private market to FHA mortgage insurance that assist families at 80 to 
150 percent of the area median income. This is compounded by the fact 
that section 8 units are not available in these markets. The waiting 
lists for section 8 have not disappeared, and in Los Angeles there are 
more than 100,000 persons waiting for section 8 assistance. Other areas 
of the country, such as New York, Seattle and Philadelphia, are in the 
same predicament as Los Angeles.
  Of course, this phenomenon is not limited to large urban areas. It is 
already affecting other areas of the country as populations grow and 
residents seek housing outside of the cities. Nearly 3.7 million people 
live in the City of Los Angeles, but 9.5 million live in the Los 
Angeles County area. From my vantage point, there is a real housing 
crisis across America.
  On its face, this does not appear to be as important a measure as 
some other housing bills that this House has considered to date. But I 
contend that this is one of the most important housing bills that we 
will consider before the end of this session.
  I, therefore, urge my colleagues to support this bill. It is a 
foolproof means of averting a national crisis in affordable housing.
  Madam Speaker, I reserve the balance of my time.
  Mr. GARY G. MILLER of California. Madam Speaker, I have no further 
requests for time, and I reserve the balance of my time.
  Ms. WATERS. Madam Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Zoe Lofgren).
  Ms. ZOE LOFGREN of California. Madam Speaker, this is a day I have 
waited for for a long time, and I really want to commend the author, 
the ranking member, Ms. Waters, and all of the committee for bringing 
this bill before us.
  I come from a county where the median price of a single-family home 
is almost $800,000, where 800-foot condos sell for about $500,000. As 
you might imagine, the FHA program simply does not work and hasn't for 
a long time.
  Recently, there was an analysis done in California. Factoring in 
housing costs, California has one of the poorest populations of the 50 
States, and this measure is going to help tremendously for normal 
working families to have an opportunity to get that piece of the 
American Dream. And I really am very pleased that it is here today. I 
think I have asked Mr. Frank on a weekly basis when this is going to be 
done, and I really commend you for moving this forward and I understand 
there is a significant chance the Senate will do so as well. It is very 
important.
  I thank the gentlewoman for yielding.

                              {time}  1930

  Ms. WATERS. Madam Speaker, I will insert in the Record a letter in 
support of H.R. 5503 sent to Members of the House by five housing and 
real estate associations.
  Madam Speaker, in closing, and before I yield back my time, I would 
just like to say I do not know if I will have the opportunity to be on 
the floor with many of my colleagues from our committee before the 
close of the session.
  But I first want to say how appreciative I am to the chairman of our 
committee, Mr. Oxley, for the leadership that he has provided, for his 
sense of fairness, and for his sense of what it takes to get both sides 
of the aisle working together. He has done a magnificent and tremendous 
job.
  Madam Speaker, I also want to thank someone who is not here. It is 
unfortunate, because I have worked closely with Mr. Ney, and he has 
done a wonderful job in helping to move these housing bills to the 
point that we see them today.
  I would like to thank all of the other members of the committee just 
in case we do not have an opportunity to be on the floor again on any 
more of those bills.
                                                    July 25, 2006.
       Dear Representative: On behalf of the membership of our 
     associations who represent the home buying, home building, 
     and home financing industries, we are writing in support of 
     H.R. 5503, FHA Multifamily Loan Limit Adjustment Act of 2006, 
     legislation to increase the Federal Housing Administration 
     (FHA) multifamily loan limits in high-cost areas. Over the 
     past several years, Congress and the Administration have 
     taken steps to update the FHA multifamily loan limits. 
     However, despite these efforts, the current maximum FHA 
     multifamily mortgage limits are inadequate and continue to 
     constrain new construction and rehabilitation in many urban 
     and suburban areas, where construction costs are 
     significantly higher than in the rest of the country.
       The FHA's multifamily mortgage insurance programs enable 
     qualified borrowers to obtain long-term, fixed-rate financing 
     for a variety of multifamily properties that are affordable 
     to low- and moderate-income families. This public/private 
     partnership has resulted in a successful program providing 
     housing for a portion of the population not usually served by 
     private industry alone. In addition to serving a valuable 
     purpose, recent analysis by HUD and OMB indicate that

[[Page 20166]]

     virtually all of the FHA multifamily insurance programs 
     operate on a break-even basis or raise revenue for the 
     government.
       Without higher FHA multifamily loan limits in high-cost 
     markets, critical housing needs will go unmet. Those who will 
     be most affected will include low- and moderate-income 
     families, including important community service providers 
     such as teachers, firefighters, and police officers. By 
     increasing the maximum loan limit for FHA's multifamily 
     programs, these programs can help provide the housing 
     opportunities necessary for the economic and social well 
     being of our nation. We applaud efforts to increase the 
     availability of affordable housing in our nation's high-cost 
     areas.

       Institute of Real Estate Management.
       Mortgage Bankers Association.
       National Association of Home Builders.
       National Association of Mortgage Brokers.
       National Association of Realtors.

  Madam Speaker, I yield back the balance of my time.
  Mr. GARY G. MILLER of California. Madam Speaker, I yield myself the 
balance of our time.
  Madam Speaker, I want to once again thank my good friend, Barney 
Frank. He worked with me in introducing this legislation. We worked it 
through the system. It is before us today.
  I would also like to thank a very good chairman of the Financial 
Services Committee, Mike Oxley. He had a vision when he took over the 
committee. He worked diligently to accomplish that vision. I wish him 
the best in his retirement. I know we are going to miss him next year 
when the committee starts again.
  Ms. LEE. Madam Speaker, I rise in strong support of H.R. 5503, the 
FHA Multifamily Loan Limit Adjustment Act of 2006.
  This bipartisan bill will allow the FHA program to keep up with the 
skyrocketing boom in housing prices--particularly in areas like my 
district in California, where the average price of a home is nearly 
$600,000.
  The FHA program has provided homeownership opportunities to millions 
of Americans who have been deemed high-risk or struggled to save down 
payment costs.
  Many residents in high-cost states like California are unable to tap 
into FHA's homeownership programs.
  In 2005, FHA only insured 5,000 loans in California because housing 
cost were too high for the FHA's low loan limit.
  Madam Speaker, there are hundreds, if not thousands, of eligible 
renters ho want to be homeowners. We must work with HUD to ensure that 
they are not locked out of the housing market.
  I applaud Congressman Miller, Congresswoman Waters, Ranking Member 
Frank and all the members who have worked together to make this bill 
and the dream of homeownership a reality.
  I ask my colleagues to support H.R. 5503.
  Mr. GARY G. MILLER of California. Madam Speaker, I yield back the 
balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California (Mr. Gary G. Miller) that the House suspend 
the rules and pass the bill, H.R. 5503.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________