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The Washington Scene

Prospects Brighter for '87 Housing Bill

February 22, 1987|JOHN BETZ WILLMANN | Special to The Times

With Democrats in firm control of both the Senate and House this year, the lame-duck Reagan Administration is expected to face heavy opposition to any budgetary plans to "privatize" the Federal Housing Administration--among many other cost-cutting proposals.

Meanwhile, prospects are brighter for a fairly meaningful 1987 housing bill now that Sen. William Proxmire (D-Wis.) has replaced Jake Garn (R-Utah) as chairman of the Banking, Housing and Urban Affairs Committee.

What might new housing legislation include?

--Prohibition of the use of FHA Section 203 single-family housing mortgage insurance by investors (who buy and then rent out the dwellings). FHA financing also might well be barred for persons buying seasonal and vacation homes.

--Barring so-called "user fees" by the Federal National Mortgage Assn., the Government National Mortgage Assn. and the Federal Home Loan Mortgage Corp. This is significant because one of the still-frustrated aims of the Reagan Administration has been to significantly increase costs of obtaining federally backed mortgages, especially those mortgages sold to Fannie Mae, Ginnie Mae and Freddie Mac. --Setting up a mortgage insurance program of home-equity conversion for older homeowners. This idea to enable retired persons to get safe income out of their homes has been around for some time. Legislation is needed to provide the means for older homeowners to get regular monthly payments--soundly and without threat of losing their homes--while their mortgages increase along with the market value of their homes. This idea also is called a "reverse mortgage" because it would lessen homeowner equity according to a long-term reverse amortization schedule.

--Creation of stricter internal standards by the Department of Housing and Urban Development to prevent program fraud, faulty appraisals and equity skimming--with the aid of civil penalties to put teeth in the law.

Another bit of good news for the housing industry, which continues to be buoyed by mortgage rates that continue to decline), is the emergence of improved mortgage securities that were legislated by the previous Congress. The new entity is called a Real Estate Mortgage Investment Conduit (REMIC) and it is used to hold a fixed pool of mortgages, while selling off the ownership of those packaged securities to investors.

On balance, the prospects for the total housing market are bullish because of three favorable conditions, according to developer Angelo Puglisi. He said the strategic threesome consists of low mortgage rates, low mortgage rates, and low mortgage rates. That's a take-off on the bromide about the three most important aspects of real property being: location, location, location.

Most builders, developers and housing experts agree that continued availability of relatively attractive mortgage rates will keep new and existing house sales moderately strong throughout 1987.

SHORTLY: A Northern Virginia development firm is pioneering by building a co-operative/corporate child-care center in a major office building complex. The idea is to assure convenient facilities for children of employees of tenant firms. The center will accommodate 81 children aged 18 months to 5 years. . . . Since ground was broken last summer for a super-luxury complex of condo apartment buildings at a prime location in suburban Montgomery County, Md., more than three-fourths of the 158 large apartment suites in the first building have brought sales contracts ranging from $250,000 to $1.4 million. Occupancy is still 18 months away.

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