July 11, 2006            

Regulations Division
Office of General Counsel
U.S. Department of Housing and Urban Development
451 7th Street, S.W., Room 10276
Washington, D.C.  20410-0500

Re: Certain Multifamily Mortgage Insurance Premiums

Dear Sir or Madam:

On behalf of the National Housing Conference (NHC), I appreciate the opportunity to comment on the agency’s June 28 proposal to increase MIPs for the FHA multifamily mortgage insurance programs.

The National Housing Conference is a nonprofit 501(c) (3) membership association dedicated to advancing affordable housing and community development causes.  A membership drawn from every industry segment forms the foundation for NHC’s broad, nonpartisan advocacy for national policies and legislation that promote suitable housing in a safe, decent environment across the nation.

We are writing to you to express our opposition to the Notice entitled “Changes in Certain Multifamily Mortgage Insurance Premiums” (Docket No. FR-4679-11) published in the Federal Register on June 28. The Notice proposes to increase the mortgage insurance premium on most FHA multifamily mortgage insurance programs without providing any justification or rationale for that fee increase.

The proposed MIP increase, which nearly doubles the cost of the insurance, will negatively affect businesses’ participation in the FHA insurance programs.  Business participation in the FHA programs is crucial to maintaining affordable rents for working families across the nation.

The FHA programs, at the current MIP, already cover all of their costs as required by the Federal Credit Reform Act.  NHC believes that it is unfair and unreasonable to place the burden of paying for other federal programs through higher rents on working families and elderly citizens by increasing the costs for these housing programs. This is simply a tax increase on these families.

While this fee increase may be designed to generate additional revenue for the federal government, I believe that revenues will actually decrease. First, many developments will no longer be feasible and thus will reduce the income that FHA would otherwise have received. Secondly, alternative financing options will now provide a better product for many owner/developers and FHA will lose the business that can go elsewhere – generally the more attractive properties and the stronger owner/developers. And, third, as the FHA program becomes viewed as unreliable and subject to change at the whim of an Administration seeking more revenue, owner/developers will abandon the program for other financing options that may not be as attractive, but are more reliable. All of this will result in less income for FHA and will leave FHA with the riskier properties. This will affect the long-term viability of the FHA programs.

The Notice exempts properties with low income housing tax credits from the MIP increase. While NHC applauds this exemption, we believe it is naive to think that tax credit properties are the only properties that provide affordable housing. Affordable housing is also financed and developed using HOME funds, Section 8 assistance and State trust funds. These properties provide housing for families with incomes at or below the range of families in tax credit-assisted properties. We appreciate the FHA programs’ strong history of providing workforce housing, however the proposed fee increases will penalize the aforementioned programs simply because they don’t have the “right kind” of subsidy or because they serve families who are not yet willing or able to buy a home.

NHC appreciates the opportunity to submit these comments and we strongly urge you to reject the MIP increases specified in this Notice and retain the current MIPs for these programs.  If further information would be helpful, please feel free to contact me.


Sincerely,


Conrad E. Egan
President and CEO
National Housing Conference
1801 K Street, NW, Suite M-100
Washington, DC  20006
Telephone (202) 466-2121 ext. 224
Email: cegan@nhc.org