HUD Backs Off MF Premium Hike

The Department of Housing and Urban Development has backed off from raising insurance premiums on multifamily mortgages in the face of industry and congressional opposition.HUD had proposed to increase annual Federal Housing Administration insurance premiums from 45 basis points to 77 bps on multifamily construction and rehabilitation mortgages, as well as refinancings. However, HUD received letters from 121 congressmen and 26 senators opposing the premium increase, which the Bush administration had proposed as part of the president's budget. The Mortgage Bankers Association warned the administration that lenders have other options, which means the FHA would lose business and the government would not collect the premiums it expects. "I think that was one of the things that persuaded them, plus there are a lot of good arguments against it," said MBA senior vice president Cheryl Malloy. "It would increase rents by 5% on affordable housing units. That's not something anyone wants to do."