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MIP Fight Enters Final Round

BY JERRY ASCIERTO

AFFORDABLE HOUSING FINANCE • JANUARY 2008

The fight over a proposed increase in the mortgage insurance premium (MIP) charged by the Federal Housing Administration (FHA) has again gone down to the wire.

The Bush administration’s proposed 2008 budget included a 35 percent MIP increase for some FHA multifamily programs, including the Sec. 221(d)(4) program, and the Sec. 223(f) and Sec. 223(a)(7) programs.

The proposed increase, which would raise the rates for all the affected programs to 61 basis points, a gain of 16 basis points, was due to go into effect Dec. 1, 2007.

But as of Dec. 3, the Department of Housing and Urban Development (HUD) had delayed implementation of the rate hikes as the Mortgage Bankers Association (MBA) continued its battle against the move.

In November, the MBA sent a letter of protest to HUD Secretary Alphonso Jackson that included the signatures of 117 members of the House of Representatives and 38 senators. The MBA also conducted a study of the proposal, which was included with the letter and circulated among members of Congress.

The study found that the increases would have an adverse effect on affordable housing developments. Fully 98 percent of the loans that the FHA endorsed in fiscal 2007 were for properties with average rents affordable to families earning 80 percent or less of the area median income (AMI), according to the study. In fact, 90 percent of those properties went further, serving families earning 50 percent or less of the AMI.

The study pointed out that the 35 percent increase in MIP rates would translate directly to a 2.6 percent increase in the rents at those properties. “This rent increase will be borne by the low- and moderate-income working Americans who typically occupy these apartments,” said MBA Chairman Kieran Quinn in a written statement.

The FHA’s Sec. 221(d)(4) program, which provides mortgage insurance for loans that finance new construction and substantial rehabilitation, is its most popular program and features 40-year non-recourse terms. The Sec. 223(f) program insures loans for the purchase or refinancing of existing properties, and the Sec. 223(a)(7) program provides streamlined refinancing of FHA-backed loans.

Many programs that serve health care properties, seniors housing, and tax credit developments were exempted from the increases. Last year, HUD proposed a 32-point rise in rates for all multifamily programs, which was defeated after a backlash from the mortgage industry.

Mile-High Meters

Denver is placing 50 more donation meters along downtown streets to raise money to help the homeless. They are in addition to 36 existing meters that were installed in early 2007.

The meter program is designed to increase awareness about Denver’s 10- year plan to end homelessness and to redirect money given to panhandlers.

“Every coin that goes into these donation meters goes through the Mile High United Way and back out to the homeless providers in Denver to create new housing, jobs, and services for the homeless,” said Jamie Van Leeuwen, project manager of Denver’s Road Home.

“Since implementation of Denver’s Road Home, panhandling on the 16th Street Mall is down 92 percent, overall homelessness is down 11 percent, and chronic homelessness is down 36 percent.”

The initial 36 meters collected 70,690 coins in their first six months of operation, raising $8,446.50.

In addition, each meter is backed by a sponsor who pays $1,000 per year.

HUD Reports Decline in Chronic Homelessness

For the first time ever, the Department of Housing and Urban Development (HUD) is reporting an 11.5 percent drop in the number of chronic homeless people.

More than 20,000 people moved from the streets into transitional and supportive housing between 2005 and 2006, according to a HUD analysis.

Advocates confirm there has been a reduction in chronic homelessness in some cities.

HUD’s press release did not detail its analysis.

According to data from 3,900 cities and counties, HUD said it found that more than 1,500 communities reported a reduction in the number of long-term homeless people over a one-year period. HUD’s analysis indicates there were 155,623 chronically homeless individuals in 2006, down from 175,914 from the year before. HUD attributes the decline to an increase in supportive-housing units.

CSH Honors AFFORDABLE HOUSING FINANCE

AFFORDABLE HOUSING FINANCE magazine was recently recognized with a Champions of Supportive Housing Award from the Corporation for Supportive Housing (CSH).

The magazine was recognized in the media category for its in-depth coverage of supportive-housing issues.

The other 2007 champions are Sen. Jack Reed (D-R.I.) and Enterprise Community Partners.

CSH is a nonprofit that works with communities across the nation to create permanent affordable housing to prevent and end homelessness.

Americans Stressed About Housing

Money and work are the leading causes of stress for most Americans, but the housing crisis is having a big effect on many, according to a new survey by the American Psychological Association.

Money and work are the top causes of stress for three-quarters of Americans, a big increase over the 59 percent that reported the same sources of stress in 2006, according to the association. Half of Americans, 51 percent, specifically cited rent or mortgage costs as a significant source of stress this year, particularly on the West and East coasts. Sixty-one percent in the West and 55 percent in the East, compared to 47 percent in the Midwest and 43 percent in the South, reported housing costs as a very or somewhat significant source of stress.

Foundation Pledges $150 Million for Preservation

The John D. and Catherine T. MacArthur Foundation said it will invest $150 million to preserve and improve at least 300,000 units of affordable rental housing across the country. The foundation’s expanded investment in its Window of Opportunity initiative includes:

• $35 million in new funding for public preservation initiatives, modeled on successful MacArthur-backed efforts in Cook County, Ill., and New York City. The new funds will be awarded to 10 states and localities through an open national competition.

• Continued funding for data collection, policy analysis, and expert assistance to encourage investment in affordable rental housing, promote best practices, and advance model policies at local, state, and federal levels.

• Additional low-cost loans to support a total of 25 mission-driven housing organizations that are working to acquire, renovate, and preserve affordable rental properties across the country.

“Nearly all of us are renters at some time in our lives, and the nation’s stock of affordable rental housing is slipping away at an alarming rate,” said MacArthur President Jonathan Fanton. “We hope that MacArthur’s expanded commitment to preserving affordable rental housing will accelerate the spread of promising preservation practices and policies at local, state, and federal levels, where more attention and action is urgently needed.”