HOUSING,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AUTHORIZATION:
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:
Guaranteed/Insured Loans. Place Cursor Here for Definition
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.
ELIGIBILITY
REQUIREMENTS:
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).
Beneficiary
Eligibility: Members of the cooperative are
eligible to occupy a dwelling in the structure whose mortgage
is insured under the program.
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 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.
Application
Procedure: The sponsor submits the SAMA application
or feasibility letter to the local Hub or Program Center. Following
HUD's approval and issuance of a SAMA or feasibility letter, the
sponsor submits a firm commitment application through a HUD-approved
mortgagee to the local Multifamily Hub or Program Center for processing.
This program is excluded from coverage under OMB Circular No.
A-110.
Award
Procedure: The local HUD field office decides
whether to approve, or reject individual applications.
Deadlines:
Deadlines are established on a case-by-case basis by the local
HUD Multifamily Hub or Program Center.
Range
of Approval/Disapproval Time: Processing times
will depend upon the degree of preparation by the sponsor and
HUD Multifamily Hub or Program Center workload.
Appeals:
If any application for mortgage insurance is denied, HUD will
state the reasons for the denial. 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.
ASSISTANCE
CONSIDERATIONS:
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.
Length
and Time Phasing of Assistance: The maximum
mortgage term is 40 years, or not in excess of three-fourths of
the remaining economic life, whichever is less, except for sales
type cooperatives where the maximum term is 35 years or not in
excess of three-fourths of the remaining economic life, whichever
is less.
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.
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 the regulations
and standards.
Records:
Mortgagees are required to service and maintain records in accordance
with acceptable lending practices of prudent lending institutions
and HUD regulations.
FINANCIAL
INFORMATION:
Account
Identification: 86-4587-0-3-371.
Obligations:
Reported under program 14.117.
Range
and Average of Financial Assistance: 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.
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.
INFORMATION
CONTACTS:
Regional
or Local Office: 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.
Headquarters
Office: Office of Multifamily Housing Development,
Department of Housing and Urban Development, 451 7th Street, S.W.,
Washington, DC 20410. Telephone: (202)708-1142. Use the same number
for FTS.
Web
Site Address: http://www.hud.gov/fha/mfh/fhamfbus.html
