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Content provided by the Catalog of Federal Domestic Assistance
14.135 Mortgage Insurance_Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate

FEDERAL AGENCY:

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

AUTHORIZATION:

National Housing Act, as amended, Section 221, Public Law 86-372, 12 U.S.C. 1715(1).
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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.
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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.

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APPLICATION AND AWARD PROCESS:
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:  
No Data Available.

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PROGRAM ACCOMPLISHMENTS:
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:   See Regional Agency Offices. 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://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or in the Catalog Address Appendix IV.

Headquarters Office:   Carmelita James 451 Seventh Street SW, Washington, District of Columbia 20410 Email: carmelita_a._james@hud.gov Phone: (202) 402-2579

Web Site Address:  
http://www.hud.gov/offices/hsg/hsgmulti.cfm

EXAMPLES OF FUNDED PROJECTS:

Not applicable.

CRITERIA FOR SELECTING PROPOSALS:

Not applicable.

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