House Passes FHA Reform Bill

AFFORDABLE HOUSING FINANCE • July/August 2010

BY BARRY G. JACOBS

The House has passed a Federal Housing Administration (FHA) reform bill (H.R. 4072) that includes an increase in multifamily mortgage limits for elevator structures and in areas with the highest construction costs.

Current law sets specific per-unit dollar limits for non-elevator and elevator buildings, with the elevator limits a few thousand dollars higher. For the Sec. 221(d)(4) program, for example, the twobedroom limit for a non-elevator building is $61,567, while the elevator limit is $67,566.

The House-passed bill, by contrast, would allow the Department of Housing and Urban Development (HUD) to set limits for elevator buildings that are up to 50 percent higher than the non-elevator limits, meaning the Sec. 221(d) (4) two-bedroom limit could be as high as $92,350.

HUD plans demonstration program for small-area FMRs

HUD is planning a demonstration program for fiscal 2011 that will establish fair market rents (FMRs) at the ZIP code level for the Sec. 8 housing choice voucher program in some metropolitan areas.

The department says the small-area FMRs are expected to make it easier for voucher holders to find housing in areas with jobs, transportation, and educational opportunities while avoiding subsidies that are higher than necessary in areas with relatively low rents.

Public housing authorities (PHAs) that want to take part in the demonstration program must administer at least 80 percent of the vouchers in their metropolitan area, and two or more PHAs in an area can submit a joint application to reach that threshold.

Because HUD expects the demonstration program to be most useful in larger FMR areas, it may restrict the small-area program to FMR areas that meet the size and affordable housing concentration requirements for the use of 50th percentile rents to set FMRs.

If HUD has to limit participation in the program because of the number of PHAs expressing interest, it will give priority to areas that are large enough for the small-area FMRs to provide a significant variation in rents, areas with the highest percentage of voucher tenants served by PHAs, and areas where PHAs have shown they will set payment standards at different levels when appropriate. The program will start Oct. 1, with additional areas to be added Jan. 1, 2011.

HUD sets goals for 2010-2015

A new HUD strategic plan lays out five goals in promoting affordable housing and sustainable communities during the fiscal 2010-2015 period.

The goals are strengthening the housing market to bolster the economy and protect consumers; meeting the need for quality affordable rental housing; utilizing housing as a platform for improving the quality of life; building inclusive and sustainable communities free from discrimination; and transforming the way HUD does business.

To provide affordable rental housing, HUD says it will support the production of millions of new units, maintaining quality, accessibility, and energy efficiency as well as affordability.

“This strategic plan isn’t just a paper exercise to produce a set of marching orders, but a real attempt to express what we want our agency, our homes, and our neighborhoods to look like in the years to come,” said HUD Secretary Shaun Donovan in a statement. “The plan sets out clear goals and defines success as we take HUD to its 50th anniversary in 2015.”

Barry G. Jacobs is editor of Housing and Development Reporter, the nation’s premier source for in-depth, factual coverage of all aspects of affordable housing and community development. The two-part publication includes informed reports and insightful analyses in “HDR Current Developments,” and an up-to-date compilation of essential documents in the “HDR Reference Files.” Jacobs is also the author of the annually updated HDR Handbook of Housing and Development Law. For more information, call (800) 723-8077.