Participating with other industry leaders in a July 18 panel discussion at a White House event commemorating the 80th anniversary of the Federal Housing Administration (FHA), NAHB Chairman Kevin Kelly said that the association will continue to work to support a vibrant agency that provides critical single-family and multifamily programs.
“Moving forward, we need to ensure that FHA maintains its role of providing stable and liquid markets,” said Kelly. “With respect to reform, we should proceed cautiously but essentially ensure that the agency is better able to assess market needs and respond efficiently and sustainably.”
During the housing downturn, the agency stepped up to provide mortgage market liquidity to the nation’s housing finance system. Since then, FHA has become the primary source of mortgage credit for first-time home buyers, minorities and those with limited downpayment capabilities.
Shaun Donovan, in one of his last official acts as secretary of Housing and Urban Development before Julián Castro takes the helm at the agency, appeared at the morning ceremony to take a look back at the last 80 years of FHA and celebrate how it has helped millions of Americans to achieve the dream of homeownership.
“FHA has been a champion of opportunity for the last 80 years,” said Donovan. “During this time, FHA has funded more than half of all first-time mortgages.” He also noted that the agency remains an important source of low-cost affordable rental housing.
Looking forward, NAHB believes FHA should take immediate steps to reduce barriers to affordability, such as lowering its annual mortgage insurance premium and resume allowing borrowers to stop paying premiums when performing loans reach an appropriate loan-to-value or maturity threshold.
FHA endorsed $4 billion in multifamily loans in 2008, which grew to $24 billion in 2013. Demand for rental housing has increased and a related rise in rents, coupled with lagging or stagnant incomes of many renters, will fuel the need for additional affordable rental units.
Therefore, Kelly said that in addition to single-family programs, FHA should continue to focus both on affordable rental housing and multifamily mortgage market liquidity.