Evans Testifies on Behalf of NMHC, NAA before House Financial Services Committee
- May 25, 2011
Washington, D.C.– Peter Evans, a partner at Chicago-based Moran and Company, testified today on behalf of the National Multi Housing Council (NMHC) and National Apartment Association (NAA) before a key subcommittee of the House Financial Services Committee. The message he delivered was that HUD’s failure to keep pace with the volume of multifamily mortgage applications is exacerbating the shortage of workforce housing, stymying job growth in the construction industry and jeopardizing revenue that could be generated through federal programs.
Evans told lawmakers that demand for apartment financing from the Federal Housing Administration (FHA) has increased more than five-fold, with applications increasing from $2 billion annually to $10 billion. Because loan processing can now as long as 18-24 months, borrowers often have no idea where in the pipelines their applications are, and the rapidly increasing demand for affordable rental housing is going sorely unmet.
Private capital markets still have not recovered, leaving apartment firms with few alternatives. Evans testified, “In 2010, new apartment construction set a post-1963 low at just 97,000 new starts. We need to build 300,000 units a year to meet demand, yet we’ll start fewer than half that many this year,”
Evans offered numerous suggestions to streamline FHA processing that would still protect the safety of FHA’s multifamily portfolio, including instructing field offices to more consistently follow its multifamily accelerated processing guide to expedite transactions. Instead of requiring all loans over $15 million to be processed by a national review committee, it should impose this additional threshold only on loans that exceed the program’s terms and requirements. He also suggested that FHA create a special underwriting team for large, atypical loans to expedite processing of more standard transactions.
Evans recognized HUD’s efforts to work with stakeholders to address its backlog and other administrative issues, but reiterated that HUD needs more resources to accommodate the increased volume in the FHA multifamily programs.
Regarding the GSEs, he spoke on behalf of the industry in opposition to suggestions that FHA replace or take over Fannie Mae and Freddie Mac’s multifamily programs. FHA is unprepared to assume a larger role and is simply not capable of providing the full range of unique and complex loans required by the apartment sector.