This is a copy of an e mail I sent to Secretary Donovan of HUD concerning problems with FHA multifamily underwriting
Mr. Secretary, I write this e mail with the highest degree of respect
for you and the administration. I worked for HUD for 30 years,
Director of Multifamily Housing in St. Louis. I had the pleasure of
meeting you back when you labored in the multifamily division when the
Swat Teams began. Needless to say I am an avid supporter of President
Obama and his efforts at creating jobs.
Having said that I am writing with some fairly important concerns
about the administration of the FHA multifamily program. Most of the
problems I am addressing can be corrected administratively without
legislation or new regulations.
The leadership of the program from the DAS on down seem to believe the
multifamily portfolio is under severe risk. If anything, the
recession has strengthened the attractiveness of apartments as solid
and safe investments. At a time where commercial lenders have closed
their doors, FHA should do everything possible to make the program
user friendly and timely. Unfortunately, it has moved in the opposite
direction. Some examples:
The new construction program now has additional capital requirements
making the program much more inaccessable.
Processing time is extrememly slow. While we all know the volume of
business has substantially increased, little has been done to bring in
additional staff. I would recommend hiring temporary or term
underwriters.
Field offices are micromanaging deals. The spirit of MAP is not being
followed; deals are regularly being re underwritten. As a matter of
fact , I don't understand why routine business should take months to
process. The MAP lenders are highly incentivized to do an excellent
job, it they don't they are out of business.
Field offices are more routlinely limiting the maximum loan term if a
project is older. This makes little sense, if the project is
structurally sound, and has appropriate amenities, age should not
matter.
Field offices are attempting to limit activity to affordable housing
or place restrictions on projects requiring affordability, or green
technology. These efforts are probably illegal and represent a
fundamental misunderstanding of the FHA programs
Some suggestions:
Any non cash out refinances should have limited processing and be
treated the same as 223a7
Processing of business should be limited to a select group of field
offices that have demonstrated their ability to perform. The
remaining staff should be used in support of the performing field
offices.
Consideration should be given to allowing MAP lenders to fully process
loans, with HUD performing a very strong post review.
HUD should once again allow service programs with non licensed senior
housing. The "Retirement Service Center" program failed in the 1980s.
The industry has changed since then. A good service program improves
the marketability of senior housing
Finally you need to hire a DAS of :Multifamily Housing who believes in
the FHA program, and understands that HUD is more than affordable
housing.
Paul Dribin 314-412-0608
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