FHA Multifamily Rental Loans Hit New Highs

Despite all-time highs for home affordability, homebuilders are seeing less demand for home construction and more for multifamily rentals, with the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration (FHA) recently releasing a report that signals new highs for rental properties across the country. The FHA said that it has endorsed some $10.5 billion in multifamily rental housing loans ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô seven times the number of loans made only three years ago and the only second time that the FHA has made so much before.

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""Never in the history of the Federal Housing Administration has there been such demand for FHA-insured financing to build, rehabilitate or refinance multifamily apartment properties,"" a ""statement"":http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-172 by the federal agency began.

The statement held that the FHA backed 1,100 in multifamily rental loans over the course of the past 11 months, which the federal agency moved to help meet by issuing new underwriting policies and federal guidance.

""FHA has never been more relevant in making sure the multifamily apartment marketplace continues to function even during these tough economic times,"" Carol Galante, FHA's acting commissioner, said in the statement.

""While we're seeing record volume, we also recognize we have to accelerate the time it takes us to process these applications so we continue to meet this demand at the very time the market needs us the most,"" she said.

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A ""HUD"":http://portal.hud.gov/portal/page/portal/HUD spokesperson could not be immediately reached for comment as a result of the Washington, D.C. earthquake that occurred midday.

According to ""_Reuters_"":http://www.reuters.com/article/2011/08/23/us-usa-housing-originations-idUSTRE77M4RG20110823, total FHA loan volume picked up significantly following the financial crisis, which saw lenders in the private sector pull back. The news service quoted _Inside Mortgage Finance_ as alleging that FHA loan volume skyrocketed to $376 billion in 2009, considerably up from $54 billion in loans the agency issued just three years before.

The reported surge in multifamily rental units follows several industry reports that find an increasing number of Americans prefer to keep renting in lieu of a dismal economy. The ""Commerce Department"":http://www.commerce.gov/ released data from the ""Census Bureau"":http://www.census.gov/ to show that new housing starts dropped by 1.5 percent over July, hitting a seasonally adjusted annual rate of 604,000 units.

""Fannie Mae"":http://www.fanniemae.com/kb/index?page=home&c=homepage released a dour ""economic outlook"":http://www.fanniemae.com/newsreleases/2011/5476.jhtml;jsessionid=I0NVYV3DAL0SLJ2FQSHSFGA?p=Media&s=News+Releases Monday that forecast continuing trouble for the housing sector. Titled ""Dark Clouds Looming Over Near-Term Outlook,"" the report revised expected growth for GDP, downgrading it from 3.1 percent to 1.4 percent.

""Macro economic factors are clearly driving the mindset of consumers and housing is being impacted by this,"" Doug Duncan, chief economist with the GSE, said in a statement. ""However, housing has moved into second position behind general economic concerns among consumers, which is demonstrated in our National Housing Survey results.""

Duncan cited data that showed some 70 percent of Americans believed the economy needed to get back on the right track.

""In turn,"" he added, ""despite historically low interest rates, consumers are still saying they don't see this as a good time to go out and borrow money to buy a house.""

Historic lows for homeownership and highs for FHA-backed multifamily rental loans track a July story by the ""_New York Times_"":http://www.nytimes.com/2011/06/30/business/30poll.html?_r=1, which found that 90 percent of Americans overwhelmingly counted homeownership among their most valuable investments.