NAA/NMHC Testify About HUD Backlog 

HUD’s failure to keep pace with the volume of multifamily mortgage applications is exacerbating the nation’s shortage of workforce housing, jeopardizing the thousands of jobs created by new apartment construction and reducing the new revenues the program could be generating for the federal government.

That is the message that NAA/NMHC delivered to Congress on May 25 in testimony before a key subcommittee of the House Financial Services Committee. Testifying on behalf of NAA/NMHC, Peter Evans, a partner at Chicago-based Moran and Company, told lawmakers that demand for apartment financing from the Federal Housing Administration (FHA) has increased more than five-fold, with applications increasing from $2 billion annually to $10 billion.

FHA has been unable to keep up with this demand, however. Loan processing times can now exceed 18 to 24 months, and borrowers often have no idea where in the pipelines their applications are.

The consequences of this backlog are magnified by the fact that private capital markets still have not recovered, leaving apartment firms with few alternatives. The result is a dramatic reduction in new apartment construction at a time when the nation’s demand for affordable rental housing is growing faster than in recent decades.

“In 2010, new apartment construction set a post-1963 low at just 97,000 new starts. We need to build 300,000 units a year to meet demand, yet we’ll start fewer than half that many this year,” Evans said.

In his testimony, Evans offered numerous suggestions to streamline FHA processing that would still protect the safety and soundness of FHA’s multifamily portfolio. Among other things, FHA should instruct field offices to more consistently follow its multifamily accelerated processing guide to expedite transactions.

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