WASHINGTON -- Buried in pending housing legislation is a provision that would help private, nonprofit organizations buy more housing units from the Resolution Trust Corp.'s portfolio, and in turn boost bond issuance to finance the deals, officials of those organizations said yesterday.
Currently, groups seeking to purchase assets from the RTC have difficulty doing so because getting mortgage insurance from the Federal Housing Adminstration is a slow, tedious process, the officials said.
The provision, however, would require the Department of Housing and Urban Development to set up a faster process for approving insurance applications when they involve purchases of RTC properties.
Offered as an amendment by Rep. Joseph P. Kennedy, D-Mass., the measure was added to housing reauthorization bill approved by the House Banking Committee's subcommittee on housing and community development. The full committee is expected to vote in the bill later this month.
If approved, the amendment "would give us an opportunity to really delve into the whole RTC multifamily portfolio," said Martin C. Schwartzberg, president of the National Foundation for Affordable Housing Solutions, a nonprofit organization working on preserving affordable housing. "The HUD [insurance] process has been inordinately slow, if existent at all."
By closing more deals, the amendment would also boost taxexempt bond issuance, because the private nonprofits tend to use 501(c)(3) bonds to finance their mortages, Mr. Schwartzberg said. "I think you can see a whole bunch of bond volume" in this area, he added, though he did not give a specific figure.
Buyers are having problems because the RTC is trying to sell off assets of failed thrifts as quickly as possible. The agency allows no more than 90 days for a buyer to put financing together and complete the deal, once the buyer purchase.
Those buyers, which often are private, nonprofit organizations, need some form of credit enhancement for their morgages in most cases, and they usally turn to the FHA.
But they often find that when they reach the end of their 90-day window, the administration is still months away from approving their insurance application, said Lynn Edwards, a lobbyist for the Enterprise Foundation, another group involved in promoting affordable housing.
"The left hand of the government is doing one thing, and the right hawnd is doing another," Ms. Edwards said.
Stephen S. Allen, the director of the RTC's affordable housing disposition program, said the amendment would be an important tool for moving more properties out of the agency's portfolio. "This will be a real help to purchasers" who have trouble completing deals, he added.
Some housing lobbyists, however, were skeptical whether the amendment would have much impact. To implement it, they said, HUD would have to go through its usual process of drafting regulations -- a process that can also drag out for months.
But the lobbyists acknowledged that the amendment does direct HUD to write those regulations within 90 days of enactment, a stipulation that could speed the process along.