WASHINGTON, D.C. – June 7, 2012 – (RealEstateRama) — The National Council of State Housing Agencies (NCSHA) urged Congress today to strengthen FHA’s affordable multifamily lending capacity by enhancing its already successful partnership with state Housing Finance Agencies (HFA). NCSHA advocated for authorizing Ginnie Mae to securitize Federal Housing Administration (FHA)-insured multifamily loans under the FHA-HFA Risk-Sharing program to help address the nation’s growing need for rental housing. These remarks were made during testimony before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity hearing on FHA multifamily mortgage insurance programs.
“Congress has the opportunity now to make greater use of a sound and proven housing program and delivery system to support the development of affordable rental homes by allowing Ginnie Mae to securitize FHA-HFA Risk-Sharing loans,” said Mary Kenney, executive director of the Illinois Housing Development Authority (IHDA), Illinois’ state HFA, testifying on behalf of NCSHA.
“The FHA-HFA Risk-Sharing program currently allows state HFAs that meet rigorous financial standards to underwrite FHA multifamily loans in return for sharing the risk of losses on those loans,” Kenney continued. “Permitting Ginnie Mae to securitize FHA-HFA Risk-Sharing loans would reduce the cost of financing rental housing developments, making it possible to achieve lower rents and reach even lower income tenants.”
HFAs predict the interest rate on the underlying mortgages could be reduced by as much as 200 basis points, or 2 percent, if Ginnie Mae were to securitize FHA-HFA Risk-Sharing loans. This rate reduction would lower rents and potentially reduce the need for and cost of other federal housing subsidies.
Barbara Thompson, executive director of NCSHA, said, “Given the Risk-Sharing program’s proven track record, lifting the prohibition on Ginnie Mae securitization is a prudent decision that would help meet our nation’s affordable housing challenges with minimal risk and no additional cost to the federal government.” She also noted, “A strong arsenal of financing tools is essential to combat the shortage of affordable rental housing in this country, which is becoming even more severe as the full impact of the prolonged housing and economic crises is felt.“
For more information about NCSHA’s position on this issue or to review the written testimony, please visit our website at www.ncsha.org.
State Housing Finance Agencies – known as HFAs – share a public purpose mission to provide affordable housing help to the people of their jurisdictions who need it.
The National Council of State Housing Agencies – known as NCSHA – is a national nonprofit, nonpartisan association that advocates on behalf of HFAs before Congress and the Administration for affordable housing resources. It represents the HFAs of the 50 states, the District of Columbia, New York City, Puerto Rico, and the U.S. Virgin Islands. Membership also includes more than 300 affordable housing industry partners.