“The national homeownership rate is 69 percent, the highest rate ever. However, a substantial subset of the population does not enjoy the benefits of homeownership,” Davis said at the Mortgage Bankers Association’s first annual Government Housing Finance Forum. “We need to step back, determine how we are, look at what we do well and don’t do well and move forward.”

Davis sought to present a “new, rejuvenated FHA” that is aggressively introducing new programs and using technologies that prove responsive to both borrowers and lenders.

“Lenders have told us—over and over and over—that the process of obtaining new insurance is too tedious and expensive. We are working on a new pilot program, rolled out in the fall—that should eliminate a lot of the redundancy,” Davis said. “Lenders have told us that FHA is too restrictive in who it works with. We are looking at ways to involve more lenders in the process, which we hope to implement later this year.”

Davis said FHA has asked its administrators to meet one-on-one with lenders across the country to better understand the issues facing them. “FHA also needs to create a better identity with consumers,” he said. Today, we expect—we want—and we will extend our goals. We will offer our families a safer, better alternative to current non-prime lending products…We want to assure FHA borrowers that we do no disappear once the loan has been made.”

While FHA has seen its share of the housing market decline over the past years, it remains a key part of the Bush Administration’s “Blueprint for the American Dream,” a public-private partnership (with support of MBA) that aims to boost the overall homeownership rate to 70 percent and to close the gap between minority and majority homeownership rates.

“We’re well along in achieving the President’s goal,” Davis said. “The number of minority homeowners has increased by 3.2 million. We’ve also proposed funding for the American Dream Downpayment initiative that has already benefited 65,000 minority home buyers. We are proposing $200 million again in fiscal 2006, which would benefit another 40,000 homebuyers.”

Davis said FHA is moving in the right direction in its single-family housing program. FHA eliminated certain paper insurance requirements and implemented an MBA-supported five-year hybrid mortgage. It also implemented a 2 percent increase in the debt-to-service ratio that Davis said would allow more families to qualify for FHA loans and introduced a streamlined version of its 203(k) program, which he said would increase participation and be easier to administer.

“Certainly, these changes have more of an impact than others,” Davis said. “Taken as a whole, it demonstrates a commitment by FHA to shed the cumbersome rules of the past. We want FHA to be a force in the future.”
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To read more on “Happy at HomeBanc,” visit www.mortgagebankingmagazine.com.
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The survey also found that residents prefer affordable housing that is single-family detached housing to town homes, low-rise or high-rise apartments. Seven out of 10 residents supports more open space in their community, respondents said. While three out of five said, there is a need for more residential growth in their communities.

Public Opinion Strategies, Alexandria, Va., conducted the National Housing Opportunity Pulse survey of 1,600 urban and suburban residents in the top 25 media markets, in May 2005.

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The Atlanta Business Chronicle ranked SouthStar Funding No. 8 on its yearly “Pacesetters” listing of the fastest growing privately held companies in the city.

Nominees for the Atlanta Business Chronicle’s Pacesetter listing must be headquartered in Atlanta, have experienced a two-year growth in sales of more than 50 percent, and posted 2004 revenue between $1 million and $300 million. Companies are ranked by a growth index formula used to even the playing field among companies of different sizes. SouthStar Funding’s 23 percent increase in production earned it a spot on the esteemed list.
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“We are working hard to promote our advocacy agenda and increase the number of MBA member companies who run a MORPAC campaign. The employees of the Capital Funding Group have joined an important set of individual members that help us protect the real estate finance industry through their generous financial contributions,” said MORPAC Chairman David Kittle, CMB.

The Capital Funding Group is a commercial mortgage lender, specializing in healthcare loans. It has grown into a national leader in FHA-insured mortgages for healthcare entities such as nursing homes, assisted living facilities, board and care homes and mental health and rehabilitation facilities. The Capital Funding Group invests in communities around the country, making it possible for more individuals to live comfortably as the population ages.

MORPAC, is the voluntary non-partisan Political Action Committee (PAC) of MBA. It is the only PAC that directly represents the interests of the real estate finance industry in our nation’s political system. MORPAC raises money to help elect and re-elect candidates to Congress who have an understanding of the real estate finance housing industries, who are supportive of our profession. 

(This article should not be construed as a solicitation of funds. For more information, visit the MORPAC Web site at www.morpac.org)
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Vinay Kapoor, the REIT’s president and CEO, said the refinance will generate mortgage interest savings of about $2.7 million annually and have a three-year principal “holiday.”

“The opportunity to lock in 10-year fixed-rate financing at favourable interest rates removes the REIT’s future interest rate and refinancing risk," Kapoor said. "As a result of this transaction, our near-term debt maturities are significantly reduced and the average cost of the REIT’s long-term debt is reduced from 6.3 percent to 5.9 percent.”

The 15 office buildings include 2.2 million square feet of property.

Meanwhile, the HUD's Mid-Atlantic division leased 78,000 square feet of the 1.4 million square foot Wanamaker building in downtown Philadelphia owned by IPC US REIT. HUD has the right to cancel the 10-year lease after five years. IPC expects the lease to be in place for its full 10-year term.

"HUD, a U.S. federal government agency, is a highly desirable tenant that will provide a very stable cash flow for the building for many years to come,” Kapoor said.

IPC US Inc. and its bank group restructured its $150 million acquisition facility up to $200 million last month. The new banking group, including KeyBank Real Estate Capital, Barclays Capital, Allied Irish Bank, Sovereign Bank, Fifth Third Bank, Canadian Imperial Bank of Commerce, Royal Bank of Canada and Euro-Hypo, agreed to reduce spreads under the loan. Spreads over LIBOR will now range between 175 basis points and 250 basis points, depending on the overall loan-to-value ratio, as compared to 300 basis points to 350 basis points under the prior facility.

The $200 million will be due three years from closing with two one-year extensions at the REIT’s option. Kapoor said the restructured line provides IPC with additional flexibility in its acquisition.

IPC said a number of financial tests have been revised to reflect the improvement in the REIT’s assets which should have a favorable impact on the loan to value (LTV) ratio. Based on the outstanding balance as of March 31, and the REIT’s then LTV calculations, the interest savings on an annualized basis would be roughly $900,000, IPC said.
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“I am a big fan of government housing,” said Petrie, himself a multifamily lender with P/R Mortgage Inc., in Carmel, Ind. “But while we celebrate high homeownership rates, glaring disparities remain. The minority homeownership rate is much lower than that of whites. In bridging the homeownership gap, government programs play a vital service. The more we bridge the gap, the more we all win.”

Working with key government agencies—HUD/FHA; the Veterans Administration; the Rural Housing Service and Ginnie Mae—MBA has been active in increasing funding and eliminating bureaucracy, Petrie said. Those efforts include:

• FHA’s Zero Downpayment program. That program, part of the Bush Administration’s “Blueprint for the American Dream,” aims to provide $200 million in appropriations that would enable 40,000 low- and moderate-income borrowers become homeowners without requiring a downpayment. MBA supported H.R. 3755, introduced by Rep. Pat Tiberi, R-Ohio, which would have allowed FHA to authorize the program, did not pass in Congress despite MBA’s support (Petrie testified before the House in support of the bill). Frank Davis, general deputy assistant secretary for housing and deputy commissioner of FHA, said the Zero Downpayment program is part of HUD’s fiscal 2006 appropriations, and Petrie said MBA would look for legislative sponsors again in the 109th Congress;

• The Rural Housing Service’s programs have grown so much in demand over the past four years that it has run out of commitment for the past two years. MBA-supported efforts enabled legislation that allocated more funds for RHS programs to prevent shutdowns in the future;

• Conforming Loan Limits—H.R. 176, the “FHA Single Family Loan Limit Adjustment Act of 2005,” introduced by Reps. Gary Miller, R-Calif., and Barney Frank, D-Mass., would raise the FHA maximum conforming loan limits to 100 percent from 95 percent. This would mean that the FHA ceiling would extend from $312,000 to $359,000. “This bill enjoys bipartisan support, and MBA strongly supports this bill,” Petrie said;

• VA Caps— MBA supported legislation last year that indexed the maximum VA guaranty amount to the Freddie Mac limit annually, resulting in a maximum VA loan amount of $333,700. The bill, passed by Congress, also included an extension of the VA hybrid ARM program beyond 2005, adds a 1-year ARM and allows the VA Secretary to establish a cap structure on ARMs with an initial term of more than three years, which will make VA 5/1 ARMs more viable;

• The FHA Home Equity Conversion Mortgage (HECM) program faced a potential shutdown when it became apparent that the funds allocated to this program, depending on interpretation, were nearly replete. In a two-week period, MBA identified the problem and arranged language in a supplemental spending bill that raised the program’s cap limit, which, Petrie said, should keep the program running in the future;

• MBA supports S. 132, the “Mortgage insurance Fairness Act,” which would amend the Internal Revenue Code of 1986 to allow a deduction for premiums on mortgage insurance. “This is a progressive tax step that benefits the lower and middle-income borrowers who can’t make the downpayment,” Petrie said.

Petrie said MBA’s goals aim to ensure that government programs such as FHA remain viable. “FHA has been around for 70 years, serving millions of Americans at no cost to the taxpayer. We want to make sure that FHA is around for the next 70 years to serve the next generations of homebuyers,” he said. “We believe that FHA faces challenges in managing its recourses, and threaten its ability to serve borrowers who need housing and affordable rental housing. FHA needs to be free of barriers. It needs the ability to invest in more technology; it needs flexibility; and it needs to invest in pilot programs that can be implemented without having to go to Congress for approval."

(For more information about MBA’s advocacy efforts, visit the Capitol Assets Program Web site at http://www.mortgagebankers.org/wash_update/cap_assets/)
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