HOUSING,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AUTHORIZATION:
National
Housing Act, as amended; Housing Act of 1964, as amended, Section
234(d), Public Law 88-560; Section 234(c), Public Law 90-448, 82
Stat. 476, 507, 1969; Section 234(c), Public Law 91-152, 83 Stat.
379, 384, 12 U.S.C. 1715(y).
To
enable sponsors to develop condominium projects in which individual
units will be sold to home buyers.
TYPES
OF ASSISTANCE:
Guaranteed/Insured Loans. Place Cursor Here for Definition
USES
AND USE RESTRICTIONS:
HUD
insures lenders against loss on mortgage loans. These loans may
be used to finance the construction or rehabilitation of multifamily
housing structures by a sponsor intending to sell individual units
as condominiums, which also would be eligible for the benefits of
mortgage insurance under Section 234(c). The program has statutory
per unit mortgage limits which vary according to the size of the
unit, the type of structure, and the location of the project. There
are also loan-to-replacement cost and debt service limitations.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Private profit-motivated developers,
public bodies, and other sponsors who meet FHA requirements for
mortgagors.
Beneficiary
Eligibility: All families are eligible to
purchase condominium units. Mortgages for individual units may
be insured under Section 234(c). See program 14.133.
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.
Pre-application
Coordination: The sponsor will have an initial
conference with the local HUD Field Office to determine the preliminary
feasibility of the project before an application is submitted. This
program is excluded from coverage under OMB Circular No. A-102.
An environmental assessment is required. 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
Procedure: The sponsor submits a formal mortgage
insurance application through a HUD approved mortgagee to the
local HUD Office. This program is excluded from coverage under
OMB Circular No. A-110.
Award
Procedure: The local HUD Field Office reviews
the application to determine whether the proposal is feasible.
Considerations include market need, zoning, architectural merits,
capabilities of sponsors, availability of community resources,
etc. If the project meets program requirements, the HUD Field
Office issues the lender a commitment to insure the project mortgage.
Deadlines:
Deadlines are established on a case-by-case basis by the local
HUD Field Office.
Range
of Approval/Disapproval Time: Processing time,
depending upon the degree of preparation by the sponsor, will
range from 3 to 6 months from the first conference with HUD to
the issuance of a firm commitment; however, in insurance upon
completion, modified form, using simplified processing, the approximate
time is only 4 to 6 weeks.
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 under certain
circumstances when more time is required.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: The maximum amount
of the loan is 90 percent of the replacement cost, the sum of the
statutory per unit limits, or sum of the unit mortgage amounts,
whichever is less. The combined HUD site appraisal and market analysis
application fee and commitment fees are $3.00 per $1,000 of the
mortgage amount, and the HUD inspection fee may not exceed $5.00
per $1,000 of the mortgage amount, except that in all cases the
combined application, commitment and inspection fee shall aggregate
no less than $65 per unit for new construction or $50 per unit in
rehabilitation cases. The mortgage insurance premium is one-half
percent of the mortgage amount.
Length
and Time Phasing of Assistance: The maximum
mortgage term is 40 years, or not in excess of three-quarters
of the remaining economic life, whichever is less, if the project
remains a rental.
POST
ASSISTANCE REQUIREMENTS:
Reports:
Any change of the mortgagor during the period of mortgage insurance
must be approved by HUD. Defaults in meeting the mortgage terms
must be reported. All mortgagors are required to submit an annual
financial statement to HUD. All approved mortgagees at any time
upon request by HUD must furnish a copy of their latest financial
statement.
Audits:
The Department of Housing and Urban Development reserves the right
to audit the accounts of either the mortgagee or mortgagor in
order to determine their compliance and conformance with FHA regulations
and standards.
Records:
Mortgagees are required to service and maintain records in accordance
with acceptable mortgage practices of prudent lending institutions
and the FHA regulations.
FINANCIAL
INFORMATION:
Account
Identification: 86-4077-0-3-371.
Obligations:
(Mortgages insured) Reported under program 14.135.
Range
and Average of Financial Assistance: The maximum
amount of the loan is 90 percent of the replacement cost, the
sum of the statutory per unit limits, or sum of the unit mortgage
amounts, whichever is less. The program has statutory per unit
mortgage limits which vary according to the size of the unit,
the type of structure, and the location of the project. There
are also loan-to-replacement cost and debt service limitations.
No loans were insured in fiscal year 2001 and none are anticipated
in fiscal year 2002.
REGULATIONS,
GUIDELINES, AND LITERATURE:
"HUD
Mortgage Insurance Handbook No. 4580.1 For Condominium Housing Insured
under Section 234 (d) of the National Housing Act"; "Bibliography
of Economic, Financial and Legal Factors-Condominium and Cooperative
Housing" (For sale by Superintendent of Documents, GPO); HUD-321-F,
24 CFR-234; "HUD Mortgage Insurance Handbook No. 4265.1, Home Mortgage
Insurance- Condominium Units, Section 234(c)", no charge.
INFORMATION
CONTACTS:
Regional
or Local Office: All projects are processed
in local HUD Offices. Persons are encouraged to communicate with
the nearest local HUD Office. See Catalog Address Appendix IV for
a list of offices.
Headquarters
Office: Chief, Home Mortgage Insurance Division,
Room 9272, Department of Housing and Urban Development, Washington,
DC 20410. Telephone: (202) 708-1212.
Web
Site Address: http://www.hud.gov80/progdesc/condo14.cfm
