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Content provided by the Catalog of Federal Domestic Assistance
14.138 Mortgage Insurance_Rental Housing for the Elderly

FEDERAL AGENCY:

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

AUTHORIZATION:

National Housing Act, as amended, Section 231, Public Law 86-372, 73 U.S.C. 654, 12 U.S.C. 1715(V).
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To provide good quality rental housing for the elderly.

TYPES OF ASSISTANCE:

Guaranteed/Insured Loans.
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USES AND USE RESTRICTIONS:

HUD insures lenders against loss on mortgages. Section 231 was designed to increase the supply of rental housing specifically for the use and occupancy of elderly persons and/or persons with disabilities. However, few projects have been insured under Section 231 in the last several years. Sections 221(d)(3) and (d)(4) are used instead (see 14.135). Insured mortgages may be used to finance construction or rehabilitation of detached, semidetached, walk- up, or elevator type rental housing designed for occupancy by elderly or handicapped individuals and consisting of 5 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. Contractors for new construction or substantial rehabilitation projects must comply with prevailing wage requirements under the Davis-Bacon Act.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   Eligible mortgagors include private profit-motivated developers, and nonprofit sponsors.

Beneficiary Eligibility:   All elderly or handicapped persons are eligible to occupy apartments in a project whose mortgage is insured under the program.

Credentials/Documentation:   Documentation regarding the characteristics of the property and the qualifications of the mortgagor must be 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:   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)application (for new construction projects) or feasibility application (for substantial rehabilitation projects) is submitted. 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 state 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. This program is excluded from coverage under OMB Circular No. A-102.

Application Procedure:   The sponsor submits a formal application through a HUD-approved mortgagee to the local HUD Multifamily Hub or Program Center. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:   If the project meets program requirements, the local HUD Multifamily Hub or Program Center issues a commitment to the lender for mortgage insurance.

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 time, depending upon the degree of preparation by the sponsor, and HUD Multifamily Hub and Program Center workload.

Appeals:   If an application for mortgage insurance is denial, 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:   For nonprofit and public mortgagors, the maximum amount of the loan is equal to 100 percent of the estimated replacement cost. For all other mortgagors, the maximum amount of the loan is up to 90 percent of the replacement cost (90 percent of project value for projects involving rehabilitation). The annual mortgage insurance premium is based on the mortgage amount. The HUD 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 at any time upon request by HUD must furnish copies of their latest financial statements.

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 practice of prudent lending institutions and the HUD regulations.

FINANCIAL INFORMATION:

Account Identification:   86-4077-0-3-371.

Obligations:   Reported under program 14.135.

Range and Average of Financial Assistance:  
No Data Available.

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PROGRAM ACCOMPLISHMENTS:
No loans were insured for FY 2001. No new loans are anticipated for FY 2002.

REGULATIONS, GUIDELINES, AND LITERATURE:

Fact Sheet, Section 231 for the Elderly; 24 CFR 231.1 et seq. Section 231, Housing for the Elderly for Project Mortgage Insurance, HUD Handbook 4570.1, no charge.

INFORMATION CONTACTS:

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 or Program Centers are listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm and 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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