To
provide good quality rental or cooperative housing for moderate
income families, the elderly, and handicapped. Single Room Occupancy
(SRO) may also be insured under this section (see program 14.184.
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 mortgage defaults for market rate rental projects.
Insured mortgages may be used to finance construction or rehabilitation
detached, semidetached, row, walkup, or elevator-type rental and
cooperative housing containing 5 or more units. The principle difference
between the (d)(3) and (d)(4) programs is the amount of mortgage
insurance available to non-profit and profit motivated sponsors.
Under Section (d)(3), a nonprofit sponsor or cooperative may receive
up to 100 percent of the HUD/FHA estimated replacement cost of the
project. Profit motivated sponsors using Section 221 (d)(4) can
receive a maximum mortgage amount of 90 percent of the FHA/HUD estimated
replacement cost. The program has statutory 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. Contractors for new construction
and substantial rehabilitation projects must comply with prevailing
wage requirements under the Davis-Bacon Act.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Public, profit-motivated sponsors,
limited distribution, nonprofit cooperative, builder-seller, investor-sponsor,
and general mortgagors.
Beneficiary
Eligibility: All families are eligible to
occupy dwellings in a structure whose mortgage is insured under
the program, subject to normal tenant selection. There are no
income limits. Projects may be designed specifically for the elderly
and handicapped.
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: For Traditional Application Process
(TAP), the sponsor has an initial conference with the local HUD
Multifamily Hub and Program Center to determine the preliminary
feasibility of the project before a site appraisal and market analysis
(SAMA) or a feasibility letter is submitted. For Multifamily Accelerated
Processing (MAP), the sponsor works with a MAP-approved lender who
submits certain required exhibits for the preapplication stage.
If the proposal is approved, the lender is invited to submit an
Firm Commitment application. 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 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. This program is excluded
from coverage under OMB Circular No. A-102.
Application
Procedure: For Traditional Application Process
(TAP) following HUD's issuance of a SAMA letter (new construction)
or Feasibility Letter (substantial rehabilitation) the sponsor
submits a formal mortgage insurance application through a HUD-approved
mortgagee to the local HUD Multifamily Hub and Program Center
for processing. For Multifamily Accelerated Processing (MAP),
the lender submits the required exhibits, including a full underwriting
package, which are then reviewed by the Multifamily Hub and Program
Center before a Firm Commitment is issued. This program is excluded
from coverage under OMB Circular No. A-110.
Award
Procedure: The local HUD Multifamily Hub and
Program Center 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 Multifamily Hub and Program Center issues the lender a
commitment to insure the project mortgage.
Deadlines:
Deadlines are established on a case-by-case basis by the local
HUD Multifamily Hub and Program Center.
Range
of Approval/Disapproval Time: Processing time,
depends upon the degree of preparation by the sponsor and whether
or not TAP or MAP is used.
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: Section 221(d)(3):
For general and limited distribution mortgagors, the maximum amount
of the loan is equal to 90 percent of the estimated replacement
cost. For nonprofit, public and cooperative mortgagors the maximum
amount of the loan may be up to 100 percent of the estimated replacement
cost in most cases. Section 221(d)(4): The maximum amount of the
loan is equal to 90 percent of the estimated replacement cost. All
projects: The mortgage insurance premium depends on whether the
application is under Section 221(d)(3) or Section 221 (d) (4). Application
processing 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.
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 must furnish
a copy of their latest financial statements at any time upon request
by HUD.
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 HUD regulations
and standards.
Records:
Mortgagees are required to service and maintain records in accordance
with acceptable mortgage practices of prudent lending institutions
and the HUD regulations.
FINANCIAL
INFORMATION:
Account
Identification: 86-4077-0-3-371.
Obligations:
(Mortgages insured) FY 01 $1,758,559,400; FY 02 est $3,076,467,966;
and FY 03 est $4,050,000,000.
Range
and Average of Financial Assistance:
Section 221(d)(3): For general and limited distribution mortgagors,
the maximum amount of the loan is equal to 90 percent of the estimated
replacement cost. For nonprofit, public and cooperative mortgagors
the maximum amount of the loan may be up to 100 percent of the
estimated replacement cost in most cases. Section 221(d)(4): The
maximum amount of the loan is equal to 90 percent of the estimated
replacement cost.
In fiscal year 2001, HUD insured 179 projects with 32,343 units,
totaling $2.1 billion. The Department expects to insure the same
amount of loans in fiscal year 2002.
REGULATIONS,
GUIDELINES, AND LITERATURE:
24 CFR 221 et seq.; Fact Sheet: Rental Housing for Moderate Income
Families, no charge; HUD Handbook 4560.2, Mortgage Insurance for
Moderate-Income Housing Projects, Section 221 (d)(4), no charge;
HUD Handbook 4560.1, Section 221(d)(3) Market Interest Rate for
Project Mortgage Insurance, no charge; HUD Handbook 4560.3, Mortgage
Insurance for Single Room Occupancy Projects; no charge; HUD Handbook
4550.3; Basic Cooperative Housing Insurance Handbook, no charge.
The Multifamily Accelerated Processing (MAP) Guide is on the web.
Refer to HUD's Multifamily business website: http://www.hud.gov/multfam1.html
under New and Noteworthy.
INFORMATION
CONTACTS:
Regional
or Local Office: Persons are encouraged to contact
the Multifamily Hub or Program Center with jurisdiction for the
proposed project. HUD Multifamily Hubs or Program Centers are listed
at http:// http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm.
Headquarters
Office: Office of Multifamily Development,
Department of Housing and Urban Development, Washington, DC 20410.
Telephone: (202) 708-1142. Use the same number for FTS.
Web
Site Address: http://www.hud.gov/fha/mfh/fhamfbus.html
