Rodrigo Lopez Testifies on the Role of FHA in the Multifamily Mortgage Markets

Rodrigo Lopez Testifies on the Role of FHA in the Multifamily Mortgage Markets

WASHINGTON, D.C. – June 7, 2012 – (RealEstateRama) — Rodrigo Lopez, CMB, President and CEO of AmeriSphere Multifamily Finance headquartered in Omaha, Nebraska, today testified on behalf of the Mortgage Bankers Association (MBA) before the U.S. House of Representatives Committee on Financial Services Subcommittee on Insurance, Housing and Community Opportunity at a hearing titled, “Oversight of Federal Housing Administration’s Multifamily Insurance Programs.”

Below is Mr. Lopez’s oral statement, as prepared for delivery.

“Good morning. My name is Rodrigo Lopez and I am the President and CEO of AmeriSphere Multifamily Finance. We are headquartered in Omaha, Nebraska and are a top 25 FHA multifamily and healthcare lender, with more than $200 million in FHA production last year. I am here this morning representing the Mortgage Bankers Association.

“The recent housing crisis put a spotlight on the importance of rental housing and FHA’s critical countercyclical role. One in every three American households lives in rental housing, and over the course of a lifetime most Americans will rent at one time or another.

“During the recession, FHA significantly increased its presence in the multifamily rental market as other market participants pulled back. We are seeing private capital steadily reentering the markets and this is a very positive sign for our economy. FHA, however, remains critical in many markets and for many types of properties, particularly older, affordable properties that investors are less willing to finance.

“I want to acknowledge the strong leadership at HUD under Secretary Donovan, Acting FHA Commissioner Galante, and newly appointed Deputy Assistant Secretary Marie Head who is with us today. These three individuals bring extensive knowledge and experience in multifamily finance to FHA that is refreshing and welcome.

“While the multifamily programs have been providing critical liquidity to the market, they also continue to have low delinquency rates and show positive cash flow.

“In fact, MBA commissioned its own study last year that found FHA multifamily and healthcare loans originated between 1992 and 2010 have generated positive net cash flows of $927 million. This period covers years of strong economic growth and the more recent recession. And HUD’s new tighter underwriting standards should further improve loan performance going forward.

“MBA commissioned this study because good data on the financial viability of the multifamily programs is not readily available at HUD. While there is extensive data available on the income and expenses of the GI/SRI fund, it is difficult to create an accurate picture of the overall health of multifamily programs because the fund contains a substantial number of single family loans.

“Congress should require HUD to separate the multifamily loans from the single family loans in the GI/SRI fund in order to provide policymakers with a better understanding of the financial performance of the multifamily programs.

“Another critical component for achieving and sustaining the housing market’s long-term vigor is ensuring that FHA has the resources it needs to operate effectively. Since 2008, HUD’s multifamily staff levels have dropped significantly. At the same time, loan volume has increased more than threefold. Technology funding has also suffered and the multifamily programs still operate without the ability to submit applications electronically.

“HUD has strived to improve its processes, but there is still a lot of room for improvement. MBA has recommended a more streamlined approach to HUD’s review of applications, and FHA is moving in that direction with a pilot program for properties with low income housing tax credits. We recommend nationwide expansion of the pilot program as quickly as possible.

“Finally, I want to touch on the proposed increase of mortgage insurance premiums for multifamily programs. The strong performance of these programs and recent tightening of underwriting standards all seem to run counter to the proposed increase. MBA believes any MIP increase ought to be supported by a careful actuarial analysis.

“Unfortunately, as I noted earlier, obtaining this data is difficult because the administration’s budget does not account for multifamily programs separately. MBA also believes that mortgage insurance premiums should be used only to manage risk associated with these programs, and not for any unrelated budgetary reason. Currently, the excess income generated by these programs is returned to the Treasury rather than used to improve the programs or set aside in a reserve fund.

“Madame Chairwoman, thank you for your focus on this vital segment of our nation’s real estate markets. The Mortgage Bankers Association stands ready to work with you on strengthening FHA and its multifamily programs. Thank you.”

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.

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MBA

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field.

Contact:

Mortgage Bankers Association
1331 L Street, NW
Washington, DC 20005

Phone: (202) 557-2700

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