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Content provided by the Catalog of Federal Domestic Assistance
14.139 Mortgage Insurance_Rental Housing in Urban Renewal Areas

FEDERAL AGENCY:

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

AUTHORIZATION:

National Housing Act, as amended, Section 220, Public Law 83-560, 12 U.S.C. 1745(k).
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To provide good quality rental housing in urban renewal areas, code enforcement areas, and other areas designated for overall revitalization.

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. Insured mortgages may be used to finance the construction or substantial rehabilitation of detached, semi-detached, row, walk-up, or elevator type rental housing or to finance the purchase of properties which have been rehabilitated by a local public agency. Properties must consist of two or more units and must be located in an urban renewal area, urban redevelopment project, or code enforcement program area, urban area receiving rehabilitation assistance as a result of natural disaster, or area where concentrated housing, physical development and public service activities are being carried out in a coordinated manner. 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 standards under the Davis-Bacon Act.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   Eligible mortgagors include private profit motivated entities, public bodies, and others who meet HUD requirements for mortgagors.

Beneficiary Eligibility:   All families are eligible to occupy a dwelling in a structure whose mortgage is insured under the program, subject to normal tenant selection.

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:   For Traditional Application Process (TAP) of a mortgage insurance application, the sponsor has an preapplication 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 Application (SAMA) application (for new construction projects) or a feasibility letter (for substantial rehabilitation projects) is submitted. For Multifamily Accelerated Processing (MAP) for new construction or substantial rehabilitation loans, the sponsor works with a MAP-approved lender who submits certain required exhibits for the preapplication stage. 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 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.

Application Procedure:   For TAP, the application for a Firm Commitment is submitted by the sponsor through a HUD-approved mortgagee, and the application is processed by the Multifamily Hub or Program Center. For MAP, the application for a Firm Commitment, including a full underwriting package, is submitted by the MAP lender to the Multifamily Hub or Program Center for review. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:   The local Multifamily Hub or 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 Multifamily Hub or Program Center issues the lender a commitment to insure the project mortgage.

Deadlines:   Deadlines are established on a case by case basis by the Multifamily Hub or Program Center.

Range of Approval/Disapproval Time:   Processing time, depends upon the degree of preparation by the sponsor and whether or not Multifamily Accelerated Processing (MAP) or Traditional Application Processing (TAP) is used.

Appeals:   If an 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 under certain circumstances when more time is required to close the loan.

ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:   For most mortgagors, the maximum amount of the loan may not exceed 90 percent of the estimated replacement cost. The mortgage insurance premium is based on the mortgage amount. The HUD application processing fee is $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 annual financial statements to HUD. All approved mortgagees must furnish copies 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:   Reported under program 14.135.

Range and Average of Financial Assistance:  
No Data Available.

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PROGRAM ACCOMPLISHMENTS:
In fiscal year 2001, HUD insured two projects with 214 units, totaling $18 million. The Department expects to insure similar number of loans in fiscal year 2002.

REGULATIONS, GUIDELINES, AND LITERATURE:

24 CFR 220.1 et seq.; Fact Sheet: Urban Renewal Housing (Mortgage Insurance), no charge; Rental Housing in Urban Renewal Areas for Project Mortgage Insurance, HUD Handbook 4555.1, no charge.

INFORMATION CONTACTS:

Regional or Local Office:   See Regional Agency Offices. Persons are encouraged to communicate with the nearest local HUD Multifamily Field Office listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or contact the nearest HUD Field Office listed 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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