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CHICAGO-US Department of Housing and Development Secretary Mel Martinez believes one hurdle to multifamily investment and development has been removed. Terrorism coverage will no longer be required on Federal Housing Authority multifamily mortgage insurance, Martinez announced this morning at the Mortgage Bankers Association of America convention.

Insurance companies, Martinez tells some of the 5,000 at the convention, were limiting or eliminating coverage of acts of terrorism while lenders were requiring that very coverage on multifamily properties. For a 100-unit property, Martinez says, the cost increases added up to $5,000 a year.

“This is putting a financial strain on multifamily properties, and discouraging the construction of new, affordable housing,” Martinez says. “HUD will now pay the claims to the lender.”

The FHA’s role in multifamily housing has nearly doubled during the current fiscal year, Martinez reports, to $2.8 billion in loans for 201 projects.

“This is an important step for ensuring more options for renters,” Martinez says. “We’re ensuring the production of more moderate-income housing in under-served areas.”

Another speaker at Tuesday morning’s general session, former New York City Mayor Rudy Giuliani, suggests terrorism fears are exaggerated. “A lot of people think the world is a more dangerous place now. Actually, it’s safer. But we don’t quite see it that way,” says Giuliani, in the city on a book-signing tour. “There’s a much greater risk that you’ll be killed by a drunk driver than you will by a terrorist. We have to learn to manage our fears about terrorism.”

Martinez also reiterated the Bush administration’s goal of boosting minority homeownership by 5.5 billion households and HUD’s efforts to provide more transparency to the lending process, including RESPA reform. Closing costs are expected to be reduced by $700 per transaction, according to Martinez, a total savings of $8 billion.

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