Multi-family builder testifies before Congress
An increase in multi-family mortgage insurance premiums (MIPs), part of the current administration’s fiscal 2013 budget proposal, will slow down construction of apartments in secondary markets, a National Association of Home Builders (NAHB) representative told Congress on June 7.
Bob Nielsen, the immediate past chairman of NAHB and a multi-family home builder from Reno, Nev., testified before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity on the proposal to raise the MIPs in order to reduce defaults. The U.S. Department of Housing and Urban Development has failed to provide an analysis on how higher MIPs would affect borrowers, lenders or renters who live in properties insured under the programs.
"The proposed increases will not provide a buffer against future FHA losses because there is no segregated fund and excess income is simply returned to the U.S. Treasury each year," Nielsen said. "Increases will only add to property owners' costs, thereby affecting rents and discouraging the production of rental housing."
Nielsen also pointed out that MIP increases would hurt market rate rental properties in the secondary markets where credit is limited because private capital currently is focusing lending activities in the strongest markets and for well-capitalized large developers.