AHF sits down with Marie Head to look at how far the FHA has come, and where it's going DEREK MEARNS Three and a half years ago, a new administration took the helm at the Federal Housing Administration (FHA), with the goal of refocusing its efforts on affordable housing.
And the agency made many strides toward that end, streamlining its processes and simplifying its requirements for deals that use low-income housing tax credits (LIHTCs). You could even say this administration put LIHTCs on the map: There's now an entire section on tax credits in the updated MAP Guide—the document that governs FHA lender activity—for the first time.
The proof is in the pudding. In 2011, the agency's tax credit volume was nearly 150 percent higher than in 2009.
But that momentum may soon hit a wall. As the country draws nearer to another heated election season, the affordable housing industry must brace itself for the possibility of a new administration coming in, one that may not be staffed with affordable housing insiders like Shaun Donovan and Carol Galante.
AFFORDABLE HOUSING FINANCE caught up with FHA multifamily chief Marie Head to see how far the agency has come, and what it hopes to achieve.
What do you see as this administration's signature achievement since the change in leadership in 2009?
I would say our biggest achievement is that we were able to step up during a time of market crisis and deliver the much-needed affordable housing to the country. In times when there was no liquidity in the market, FHA clearly stepped up to the plate. Our portfolio increased, our pipeline increased; the amount of business and production that we managed from 2008 to 2011 went up by $10 billion.
What would you consider to be some other positive accomplishments?
I think that the preservation of affordable housing and the fact that this administration has really focused on getting guidance out to our stakeholders, and keeping housing affordable for the folks that need it. I would also say that we've made tremendous strides at streamlining our production processes. I've been in this business a long time, and FHA has not always been the easiest capital source to deal with, but I'm very proud of the strides that have been made here. And the time frames on our loans have been significantly reduced while at the same time managing the staffing levels that we have to deal with.
We also have done a tremendous job of managing the risk because of the change in profile of our business. We're now much broader in the market-rate arena than we were before. So managing some of the challenges there, with getting up to speed on that portfolio, moving from a more assisted portfolio to a market-rate portfolio.
Can you provide an update on the Tax Credit Pilot Program?
We rolled out the Tax Credit Pilot Program earlier this year. In May, we had an industry meeting where we brought in both our industry partners on the Tax Credit Pilot Program—the lenders that we approved—and we brought in our field staff that were responsible for this, so that we could train them together and make sure everyone is on the same page. We are working on some of our first loans in the program for the streamlined process. And when I say we are working on them, we've heard about these transactions that are about to be submitted to us for underwriting imminently. We are now at a point where we are looking at expanding the program to additional lenders and additional field office hubs. And we've also put some things in place where we can manage this project and track the number of loans we are doing and manage our resources effectively to make sure that it's a success.
You mentioned staffing levels earlier. To what degree have staffing shortfalls slowed down the FHA's processing of applications?
I don't think the staffing shortfalls are what slowed down the process. I think the fact that we were in the market in a much broader sense than we had ever been in our history—on the marketrate side—was probably the biggest reason for the shortfall. Clearly the staff stepped up to the plate. While the time frames did not always meet expected time frames, we've now put some additional streamlined initiatives in place that are helping us deliver. In fact, on the last count, our processing time frames have been decreased by about 75 percent, and the loans in our pipeline are now ... you know, there are a few stragglers, but most of them are less than 90 days old. So that's a huge accomplishment for us.
What sort of overall multifamily volume do you expect to get done this year compared with the number from last year?
Right now, we are tracking to meet the same volume that we did last year. A lot of that is due to the fact that some of the loans left over from last year are getting through the process now. So I think we are going to be on track to do the same amount of business we did last year.
What are you expecting in terms of the tax credit business? Are you expecting more than last year?
Yes. In fact, we have seen some increases in our volume in the tax credit program, which is another very good reason for the Tax Credit Pilot Program. But from 2011 compared with 2009, we saw a 149 percent increase in the number of firm commitments that were issued, both for new construction, for purchases, and rehabilitation of some older tax credit properties.