' ».
• t
'■ 7,
kb
< v» ._ i.Z . ,? J »
I he P ori land O bserver » S eptember 20, 1995
P agi A 7
Wl{£
^ o rtta n b
Wbsi'rucr
Housing Administration Faces Radical Change
The Federal Housing Adminis­
tration, long revered for its part in
creating a middle-class lifestyle for
millions of American households, is
facing radical change or even com­
plete elimination within the next year.
A feeling that the agency has
become lumbering, wasteful and ir­
relevant is growing among a spec­
trum o f opinion makers ranging from
firebrand first-term Republican mem­
bers o f Congress to local housing
activists.
And even the Department o f
Housing and Urban Development,
which is fighting for its very exist­
ence against Republican onslaughts,
has proposed changing FH A from an
agency under its umbrella to a gov­
ernment corporation with fewer di­
rect ties to federal housing bureau­
crats.
Ironically, the staunchest cham­
pions o f retaining the FHA as it is are
normally found arm-in-arm with the
Republicans they now confront —
groups such as the mortgage bank­
ers, Realtors and home builders.
These groups, o f course, have profit­
ed enormously over the years from
FHA mortgage insurance that has
stimulated the buying, building and
financing o f homes, particularly in
lower-income areas.
But this Congress, with smaller-
government zealots looking every­
where for federal programs to cut,
appears poised to make far-reaching
changes. And FHA’s recent history
o f scandal and staggering losses in its
multifamily programs — plus high
single-family default rates in many
poor, urban areas— makes the agen­
cy highly vulnerable. Proposals for
reform range from just tinkering with
the agency’s structure to completely
dismantling it.
One ambitious program being
developed by a key Republican con­
gressman, Rep. Rick Lazio o f New
York, chairman o f a pivotal housing
subcommittee, would put the FHA in
a new cabinet-level department that
would replace HUD and deal in an
integrated way w ith a range o f prob­
lems facing communities around the
country.
The changes may not come until
next year — and they may not come
at all, given FHA’s durability and the
political crosswinds o f a presidential
election year — but they are almost
certain to be given strong consider­
ation.
“ I see storm clouds forming and
I hear claps o f thunder, and that sug­
gests an impending storm ,” said
Michael Ferrell, chief lobbyist for
the Mortgage Bankers Association
o f America. “How severe itw illbe, I
just don't know.”
The FHA was born in 1934 dur­
ing the Great Depression, providing
a government guarantee for long­
term housing finance at a time when
the few home loans that could be had
required up to 50 percent down and
had to be refinanced after 5 or 10
years. It was targeted to financing
new construction as an economic
stimulus measure.
The agency’s heyday was ip the
late ’40s and ’50s, when FHA-in-
sured loans were the money engine
that powered the phenomenal growth
of new suburbs across America,
spearheading an increase in the home-
ownership rate from 44 percent in the
mid-1930s to 62 percent to 1960.
The only criticism o f the FHA’s
role during that era was that it; along
with federal highway spending, may
have helped spur white and middle-
class flight from the cities.
To answer that complaint, FHA
in the 1960s began making loans on
existing homes in the cities along
with new homes in the suburbs, a
move that was initially hailed by
housing activists.
But in the years that followed it
became clear that unscrupulous real
estate agents and lenders were using
the 100 percent mortgage guarantee
to entice people into homes they
couldn’t pay for, leading to wide­
spread foreclosures in certain neigh­
borhoods.
Meanwhile, FHA’s program of
financing lower-income apartment
development ran into serious prob­
lems with mismanagement and fraud
during the 1970s and 1980s.
While the FHA was taking these
hits, the mortgage lending industry,
under government prodding, devel­
oped into an enormous, sophisticat­
ed and flexible money machine that,
more and more, is beginning to lend
to the first-time, lower-income and
minority home buyers that ostensi­
bly have been I I lA ’sm ain reason for
being.
Supporters o f FI IA point out
that in 1993 I I percent o f FHA bor­
rowers were African-American and
41 percent had incomes below 80
percent o f median. In contrast, only 4
percent o f borrowers using private
m ortgage insurers were African-
American and 14 percent were be­
low 80 percent o f median.
Fannie Mae Expands Rural Lending Options
Direct home mortgage loans that
provide no down payment financing
for lower income rural residents will
be more widely available through a
partnership announced Tuesday be­
tween the federal Rural Housing and
Community Development Services
department and Fannie Mae.
By agreeing to purchase con­
ventional first mortgages in conjunc­
tion with the department’s issuance
Kids Are
Skybound
With
Mentors
▲
o f subsidized second mortgages, Fan­
nie Mae dramatically increases the
availability o f affordable rural loans
to low-income borrowers.
The combined first and second
mortgages can eliminate the need for
adown payment, providingqualified
rural borrowers with up to 100 per­
cent ofthe financing required to com­
plete a home purchase.
T he effe c t o f a co n v en tio n al
first m ortgage at m arket interest
rates and a subsidized, low -in­
te re st se c o n d m o rtg a g e g iv e s
borrow ers 30-year financing with
an effectiv e loan paym ent th at is
below m arket rates.
Dependingon final congression­
al appropriations, up to 20,000 rural
households could receive 30-year
fixed rate mortgages under the pro­
gram.
LISCENSED IN OREGON SINCE 1975
Singles & Seniors, I can help youi
A re You U n em p lo yed !
W o rkin g , B u t Going N o w h e re !
PCC’s Skill Tech Program Can Help.
PCC’s free 18-week course can give you the skills you need to
get a good job. You will receive one-on-one attention in small
classes. You will get work experience and help finding a
permanent job.
Don’t wait! These classes will fifl up soon. Call or stop by
the PCC Skill Center at the corner of N. Killingsworth and
Albina. New orientations are held every Tuesday at 9 a.in.
“1st Class Guarantee’’
A-ZEBRA
19.
WXTOB
rmls
Continued from front
Your Success Starts Here!
C a ll N o w : 9 7 8 - 5 4 5 0
Portland
Community
College
O
Realty J Inc.
WMW
300 NE Multnomah, Suite #27
Portland, Oregon 97232
George A. Hendrix
MBA, GRI, Broker
Warn Industries and members
of Columbia Aviation fly as mentors
for the day.
The effort is part o f the Centers
for Airway Science program, which
steers kids away from dugs and gangs
into fun activities emphasizing math,
science and computer technology.
Children ages 9 to 12 are enrolled.
The program is sponsored by
the Warren Lee Strickland Founda­
tion and the Columbia Boys and G iris
Club. Strickland was one of three
Arkansas blacks to attend college in
the 1920s.
His son is honoring his late fa­
ther’s accomplishments in life by
offering opportunities to youths who
might not otherwise have them.
(503) 230-1390 • (Res.) 287-6837
MY BROTHERS
BAR-B-Q
PLUS
IM P R O V E D WAY
7 3 3 9 N. E. MARTIN LUTHER KING BLVD.
PORTLAND, OREGON
"TRY THE REST THEN COME HAVE THE BEST”
CATERING SERVICE AVAILABLE
DINE IN OR TAKE OUT
PLACE ORDERS BY PHONE OR FAX
Join In
Celebrating
(503) 283-0201
(503) 283-0203 FAX
HOURS SUN - THURSDAY 1 0 :0 0 A.M. TO 9 :0 0 P.M.
FRIDAY & SATURDAY 1 0 :0 0 A.M. TO 1 1 :0 0 P.M.
^jjortlanh
(Observers
FEATURING
a small business or SBA loan
, BAR-B-Q DINNER & CREOLE DISHES
PROPRIETORS: EDDIE AND JOSIE RICHEY
you want someone to hear you
And respond. A t First Interstate
New & used books on
Business, Music, &
African-American Studies .
ANNIVERSARY
Dad’s
OU
Servies
POWELL’S
CITY OF BOOKS
Speedy Service
Friendly
Call For Ouote
..
H a n k'
W e ll
listen
We ll learn We ll respond And
9 AM - 11 PM Monday through Saturday
9 AM - 9 PM Sundays
Used books bought every day till 8:30 PM
On the #20 Bus line • One hour free parking
1005 West Burnside Street
Best Cash Price»
104 NE Russel
282-5111
Interstate
we ll get started. Just as soon as
heating oils
Portland, OR 97212
o f ours to do both lor
(
228-4651
- ■ — *
4
First Interstate Bank