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14.126 Mortgage Insurance_Cooperative Projects
HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
National Housing Act, as amended, Section 213; Housing Act of 1950, Public Law 81-475; Housing Act of 1956, Public Law 84-1020, 12 U.S.C. 1715(e); Public Law 91-152, 83 Stat. 379, 383; Public Law 84-345, 69 Stat. 635; Public Law 87-70, 75 Stat. 149, 179; Public Law 86-372, 73 Stat. 654, 656; Public Law 89-117, 79 Stat. 451, 469; Public Law 89-754, 80 Stat. 1255-66.
Enables nonprofit cooperative ownership housing corporations or trusts to develop or sponsor the development of housing projects to be operated as cooperatives. Section 213 allows investors to provide good quality multifamily housing to be sold to such nonprofit corporations or trusts upon completion of construction or rehabilitation.
TYPES OF ASSISTANCE:
USES AND USE RESTRICTIONS:
HUD through the Federal Housing Administration (FHA) insures lenders against loss on mortgages. Insured mortgages may be used to finance construction, acquisition of existing, or rehabilitation of detached, semidetached, row, walk-up, or elevator type housing consisting of five or more units. 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.
Applicant Eligibility: Eligible mortgagors are nonprofit cooperatives, ownership housing corporations or trusts which may either sponsor projects directly, sell individual units to cooperative members, or purchase projects from investor-sponsors (builders, developers, or others who meet HUD requirements).
Pre-application Coordination: The sponsor has an initial conference with the local HUD Multifamily Hub or Program Center to determine the preliminary feasibility of the project before a site appraisal and market analysis (SAMA) application (for new construction projects) or a feasibility application (for substantial rehabilitation projects) is submitted. This program is excluded from coverage under OMB Circular No. A-102. An environmental assessment is required for this program. 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 for additional information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.
Formula and Matching Requirements: Sales-Type: The maximum loan for the sales project is the amount equivalent to the aggregate total of the maximum mortgage amounts that would be allowed for the individual units comprising the project under Section 203(b) - Program 14.117 - of the National Housing Act. Investor-Sponsor: The maximum amount of the loan to the investor sponsor is equal to 90 percent of the estimated replacement cost. Management-Type: The maximum amount of the loan is equal to 98 percent of the estimated replacement cost. All Projects: The annual mortgage insurance premium is one half percent of the mortgage amount. The combined FHA application and commitment fees are $3 per $1,000 of the mortgage amount. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount.
POST ASSISTANCE REQUIREMENTS:
Reports: Defaults in meeting the mortgage terms must be reported. All approved mortgagees at any time upon request by HUD must furnish a copy of their latest financial statement.
Account Identification: 86-4587-0-3-371.
In fiscal year 2001, HUD insured five projects with 302 units, totaling $35 million. In fiscal year 2002, the Department expects similar numbers of insured loans.
REGULATIONS, GUIDELINES, AND LITERATURE:
24 CFR 213; HUD-321-F, "Bibliography of Economic Financial and Legal Factors-Condominium and Cooperative Housing." (For Sale by Superintendent of Documents, Government Printing Office, Washington, DC 20402, 45 cents); HUD Handbooks 4550.1 and 4550.2 "Basic Cooperative Housing Insurance, and Pre-sale Management Type Co-ops", no charge; HUD Handbook 4550.3, "Converting an Existing Project to a Cooperative", no charge; HUD Handbook 4240.3, Section 203 (n), Application Through Insurance (Single Family), no charge; HUD Handbook 4550.4, Supplementary Loan-Cooperative Housing", no charge; HUD Handbook 4550.5, "Investor-Sponsor and Nonprofit Sponsorship of Housing Cooperatives", no charge; HUD Handbook 4550.6, "Sales Type Cooperatives", no charge.
Regional or Local Office: See Regional Agency Offices. Persons are encouraged to communicate with the Multifamily Hub or Program Center with jurisdiction for the proposed property. HUD Multifamily Hubs and Program Centers are listed on the web at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm.
EXAMPLES OF FUNDED PROJECTS:
CRITERIA FOR SELECTING PROPOSALS: