The Federal Housing Administration (FHA) is cutting the cost of insurance on loans for certain multifamily assets.
FHA overseer the U.S. Department of Housing and Urban Development (HUD) announced several premium cuts on Thursday for properties that support affordable housing and energy efficiency. FHA estimates that the cuts to the annual and upfront insurance premiums will boost loan volumes by $400 million for affordable and energy-efficient apartments, and spur the rehabilitation of an additional 12,000 units per year.
HUD said it is trying to improve rental affordability in the face of rising rents. In 2014, more than half of renters spent 30 percent of their incomes on rent, and more than a quarter spent half their income, HUD said in a news release. Each year the U.S. loses more than 300,000 affordable-housing units, the agency said.
“Families across the country are struggling through an affordable-housing crisis,” said HUD Secretary Julian Castro, who announced the changes at an affordable-housing complex in Columbus, Ohio.
“By reducing our rates, this administration is taking a significant step to encourage the preservation and development of affordable and energy-efficient housing in communities large and small,” Castro continued. “This way, hard-working families won’t have to make the false choice between quality or affordable housing.”
For all its apartment programs, FHA had commitments totaling $9.96 billion in fiscal 2015 (October through September), which was down from a peak of $17.1 billion in 2013, but significantly higher than the 2001-09 period, the agency has reported.