Builder - December 2008 - (Page 74) With credit tight, builders and buyers line up for FHA financing. B ill Renner knows exactly when access to governmentinsured mortgages became essential to the survival of home building companies around the country. That would be March 2008, when Congress passed an economic stimulus bill temporarily raising the loan limits for FHA-insured loans to as high as $729,750 in some parts of the country, more than twice as high as before. “Because loan limits had become so far away from prices in markets like California, builders did not even think of FHA,” says Renner, director of single-family finance at the NAHB. “This opened these markets back up to the use of FHA, and I got calls from builders turning to FHA, asking, ‘What are these new requirements?’” That’s a reasonable question—but it also indicated just how much FHA’s market share had shrunk during the boom. “FHA hadn’t added any new requirements since 1996,” Renner says. “These guys hadn’t used FHA since the ’80s.” Times have changed. Subprime loans have slunk back into the darkness, but with banks clinging to cash like a lifeline, conventional mortgage financing has disappeared even for creditworthy borrowers. “This is the tightest lending environment I’ve ever seen, and I’ve got 27 years in the business,” says Dan Klinger, president of K. Hovnanian American Mortgage, the financial services division of public builder Hovnanian Enterprises. That tightening has resulted in a tremendous expansion of FHA in terms of the number of home loans endorsed, dollar value of mortgages insured, and its share of the overall mortgage market. For better or for worse, FHA has become an essential source of mortgage fi nancing during this housing slump, nearly tripling the dollar volume of home mortgages that it insures between 2007 and 2008 alone, to more 74 ■ B U I LD E R de c e m ber 2008 ONLY GAME IN TOWN BY ALISON RICE I LLUSTRATIONS BY DAVI D PLUNK ERT W W W.BUILDERONLINE.COM
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