The MBA and NAHB jointly contend that the increase is tantamount to a tax on renters. "The proposed premium increase is a tax on renters and would cause multifamily rents to increase by 4%," said Michael Petrie, president of P/R Mortgage and chairman of MBA's Commercial Real Estate Finance/Multifamily Board of Governors.
"At a time when the national economy is struggling, this increase would hurt those families that can least afford it," Petrie continues. "The FHA multifamily credit subsidy crisis urgently needs to be addressed, but not on the backs of renters. We are also very concerned that HUD chose to circumvent the normal rulemaking process."
MBA and NAHB officials argue that in instituting the immediate change, HUD circumvented the rulemaking process. Spokespeople for both organizations issued a statement noting, "While HUD Secretary Mel Martinez is to be applauded for addressing the shutdown of FHA's rental program, the organizations believe that raising the premium is the wrong approach to solving the current shortfall in FHA's multifamily insurance program."
When the FHA program shut down in April, the development of more than 50,000 rental units in 33 states ceased. The MBA and NAHB point out that Congress approved $40 million in December as emergency supplemental appropriation, but can only be used if an emergency is declared by the Bush administration, a step it has not taken nor has HUD.
According to the two real estate groups, members of Congress and the real estate community have requested just such an action to no avail. The requests are in part based on a National Housing Conference report of last year that found 13.7 million households have a critical housing need, paying more than half the household income for housing or living in severely inadequate housing.
"FHA's multifamily insurance programs are critical to builders' efforts to meet the great demand for affordable rental housing for working families across the country," stated Bruce Smith, president of NAHB. "We urge the administration to immediately release for the FHA programs the $40 million in supplemental appropriation, and we also urge Congress to make affordable housing a priority in next year's budget and fund enough credit subsidy to meet the demand in fiscal 2002."
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