Letter to Secretary of Department of Housing and Urban Development Alphonso Jackson

Letter

Letter to Alphonso Jackson, Secretary, Department of Housing and Urban Development

Reps. Barney Frank (D-MA), Chairman of the House Committee on Financial Services, along with Ranking Member Spencer Bachus (R-AL), Maxine Waters (D-CA), Judy Biggert (R-IL), and Shelley Capito (R-WV), and Gary Miller (R-CA), today sent a letter to Department of Housing and Urban Development Secretary Alphonso Jackson regarding the news that HUD may publish in the Federal Register a substantial increase in the fees FHA charges for insured multifamily rental housing loans. The members urged Secretary Jackson not to publish such a fee. The full text of the letter as follows:

Honorable Alphonso Jackson
Secretary
Department of Housing and Urban Development
451 7th St. SW
Washington, DC 20410

Dear Mr. Secretary:

It has come to our attention that the Department of Housing and Urban Development may publish in the Federal Register, as soon as this Thursday, a substantial increase in the fees FHA charges for insured multifamily rental housing loans. We write to urge HUD not to publish such a fee increase at this time.

As you know, on July 30, 117 House members sent you a letter asking HUD not to implement the FHA multifamily loan fee increase included in HUD's FY 2008 budget. That letter pointed out that such fees are not necessary, since these loans produce a negative credit subsidy absent such fee increases, and that the fee hikes would raise the cost of affordable rental housing projects and make many proposed projects no longer financially viable. A copy of that letter is enclosed.

Moreover, just last month, the House approved FHA reform legislation, H.R. 1852, by a vote of 348 to 72. That bill included a provision, adopted as an amendment in committee by voice vote, prohibiting any FHA fee (premium) increase unless the HUD Secretary determines, pursuant to rulemaking, that, absent such increase, a credit subsidy appropriation would be needed. In addition, that same week, the Senate Banking Committee approved their FHA reform bill by a vote of 20 to 1, which included a virtual identical prohibition, except that the Senate provision is only effective through the end of Fiscal Year 2008. These provisions unequivocally state the will of Congress that FHA multifamily loan fees should not be unnecessarily increased under the present circumstances in which the program already produces a negative credit subsidy.

In light of the recent turmoil in our mortgage markets and the rise in defaults and foreclosure, this is not the time to be adding to the cost of producing new affordable rental housing. Therefore, we respectfully ask you not to adopt this fee increase.

Sincerely,

BARNEY FRANK

GARY G. MILLER

MAXINE WATERS

SPENCER BACHUS

SHELLEY MOORE CAPITO

JUDY BIGGERT

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