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Supplemental Loan Insurance_Multifamily Rental Housing
The Department of Housing and Urban Development's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. HUD fulfills this mission through high ethical standards, management and accountability, and by forming partnerships with community organizations.
Persons are encouraged to communicate with the nearest local HUD Multifamily Hub and Program Center listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or contact the nearest HUD Field Office in the Catalog Address Appendix IV.
Program Accomplishments
In Fiscal Year 2007 HUD insured 4 mortgages with 819 units/beds, totaling $5.5 million. It is estimated that the Department will insure approximately the same number of mortgages in Fiscal Year 2008.
Uses and Use Restrictions
Section 241(a) insures lenders against loss on loans made either (1) to finance additions and improvements of multifamily housing projects, nursing homes, hospitals and group practice facilities already subject to HUD/FHA insured mortgages or mortgages held by HUD, or (2) to finance energy conservation improvements.
The proceeds of a loan involving an insured nursing home, hospital or a group practice facility may also be used to purchase equipment to be used in the operation of such nursing home or facility.
The maximum insurable loan for an insured project is an amount which, when added to the outstanding balance of the existing insured mortgage, does not exceed the amount insurable under the program pursuant to which the mortgage covering such project or facility is insured.
Where the project is covered by a mortgage held by the Secretary the principal amount of the loan shall be in an amount acceptable to the Secretary.
Contractors of substantial rehabilitation projects must comply with prevailing wage requirements under the Davis-Bacon Act.
Section 241(a) for apartments requires appropriated credit subsidy, which is limited.
Eligibility Requirements
Applicant Eligibility
Owners of a multifamily project or facility already subject to a mortgage insured by HUD or held by HUD.
Beneficiary Eligibility
Individuals/families and owners of multifamily projects.
Credentials/Documentation
Documentation regarding the characteristics of the property and the qualifications of the mortgagor are assembled by the mortgagee and submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.
Aplication and Award Process
Preapplication Coordination
The sponsor will have a preapplication conference with the local HUD Multifamily Hub and Program Center which does multifamily processing to determine the preliminary feasibility of making the proposed improvements before a formal application is submitted.
This program is excluded from coverage under OMB Circular No.
A-102.
This program is eligible for coverage under E.O.
12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.
Application Procedures
The sponsor submits a formal application for review and approval or disapproval through a HUD-approved mortgagee to the local HUD Multifamily Hub or Program Center. This program is excluded from coverage under OMB Circular No. A-110.
Award Procedures
If the proposed improvements meets program requirements, the local HUD Multifamily Hub and Program Center issues a commitment to the lender to insure the mortgage.
Deadlines
Deadlines are established on a case-by-case basis by the local HUD Multifamily Hub and Program Center.
Authorization
National Housing Act, as amended, Section 241, Public Law 90-448, 12 U.S.C. 1715, Public Law 94-375, 12 U.S.C. 1715z-6.
Range of Approval/Disapproval Time
Processing time depends upon the degree of preparation by the sponsor and workload in the HUD Multifamily Hub and Program Center.
Appeals
If an application for mortgage insurance is refused, HUD will state the reasons for the refusal. If reapplication is desired, the applicant may modify the application and reapply.
Renewals
The term of a commitment to insure may be extended when more time is required to close the loan.
Assistance Considerations
Formula and Matching Requirements
The amount of the loan may not exceed 90 percent of the estimated value of the improvements, additions, or equipment.
Length and Time Phasing of Assistance
A loan for a project with a HUD-insured or HUD-held mortgage must have a maturity acceptable to HUD.
Post Assistance Requirements
Reports
Any change of the borrower during the period of loan insurance must be approved by HUD.
Defaults in meeting the loan terms must be reported.
All borrowers are required to submit an annual financial statement to HUD.
All approved lenders at any time upon request by HUD must furnish copies of their latest financial statements.
Audits
The Department of Housing and Urban Development reserves the right to audit the accounts of either the lender or borrower in order to determine their compliance and conformance with HUD regulations and standards.
Records
Lenders are required to service and maintain records in accordance with acceptable lending practices of prudent lending institutions and the HUD regulations.
Financial Information
Account Identification
86-4077-0-3-371.
Obigations
(Loans insured) FY 07 $5,477,300; FY 08 est $7,500,000; and FY 09 est $10,000,000.
Range and Average of Financial Assistance
Loan sizes typically range from $250,000 to $1,500,000, with an average of $1,375,000. Project sizes range from 20 units to 290 units with an average of 204 units.
Regulations, Guidelines, and Literature
24 CFR, 241 et seq.; HUD Handbook 4585.1 "Supplemental Loans for Project Mortgage Insurance," Section 241, no charge, available on HUDCLIPS at http://www.hudclips.org.
Information Contacts
Regional or Local Office
All projects are processed in Regional and Local Multifamily Hub or Program Center. Persons are encouraged to communicate with the nearest local HUD Multifamily Hub and Program Center listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or contact the nearest HUD Field Office in the Catalog Address Appendix IV.
Headquarters Office
Office of Multifamily Development, Department of Housing and Urban Development, Washington, DC 20411. Telephone: (202) 708-2556. Use the same number for FTS.
Criteria for Selecting Proposals
Not applicable.
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