December 9, 2003 - The National Association of Home Builders (NAHB) applauded House passage last night of S. 811, the "American Dream Downpayment Act," legislation that promotes housing affordability and increases rental and homeownership opportunities nationwide.
"This important housing bill, which cleared the Senate two weeks ago and will be signed into law shortly by President Bush, will spur badly needed apartment construction in such major markets as Boston, San Francisco, Los Angeles, Chicago and New York. It will also help tens of thousands of working families to become new home owners," said Jerry Howard, executive vice president and CEO of NAHB.
The Federal Housing Administration (FHA) multifamily mortgage insurance program is a critical source of financing for affordable multifamily rental housing. The legislation will raise the loan limits in high-cost markets, enabling multifamily builders there to use the program to finance affordable rental housing.
The measure will boost limits for FHA-insured loans in high-cost areas to 140 percent above the program’s base limit. The current limit is 110 percent. For special projects in high-cost areas, the HUD secretary will have the discretion to raise the maximum loan limit to 170 percent above the base.
The bill also authorizes $200 million annually to assist low- and moderate-income home buyers with downpayment and closing costs, providing grants of roughly $5,000 to an estimated 40,000 home buyers annually.
The legislation also contains a provision designed to increase the use of the FHA’s hybrid adjustable rate mortgages. These loans have a fixed interest rate for an initial period that is typically three, five, seven or 10 years and then switch over to an adjustable rate, and they enable more families to qualify for a home loan because the initial interest rate is lower than the rate on a conventional 30-year, fixed-rate mortgage.
"NAHB congratulates the Administration on passage of the "American Dream Downpayment Act," which is the centerpiece of its housing agenda this year aimed at helping to achieve the goal of 5.5 million additional minority home owners by the end of the decade," said Howard.
