Home purchases are expected to increase in the wake of a ruling issued by the Federal Housing Authority increasing the threshold dollar amount of multifamily insurance loans.
The threshold change from $75 million to $120 million represents the first such alteration in FHA policy in nearly a decade.
In announcing the decision, the FHA said the change will “enable a greater number of transactions to use standard underwriting processes” when applying for the agency’s multifamily insurance.
“We know that borrowers are contending with the dual challenges of increased developments costs and meeting the nation’s dire need for more rental housing,” remarked Julia Gordon, Federal Housing Commissioner.
In a statement, Gordon continued: “Anything we can do to prudently alleviate extra steps in obtaining FHA insurance will help all of us meeting the housing supply challenges before us.”
Official documentation pertaining to the policy change describes it as prudent, adding that the change is in response to the “cost increases of housing and construction over the last decade, without providing undue risk to the FHA insurance fund.”
In an interview with the publication Globe Street, Dave Borsos, vice president of capital markets for the National Multifamily Housing Council, described the FHA announcement as “extremely important for the production or rehabilitation of rental housing.”
Borsos added that the policy change now will “allow for more loans, affordable or market rate, to utilize a standard processing path resulting in a simplified underwriting process and timeline.”
The move has also been applauded by the National Association of Realtors, with president Kenny Parcell observing: “The real estate market looks drastically different than it did almost ten years ago, and this increase reflects the changes in the market and the need to speed up and encourage multifamily rental development.”
By Garry Boulard
