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14.155 Mortgage Insurance for the Purchase or Refinancing of Existing
HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
National Housing Act, Section 223(f), as amended; Housing and Community Development Act of 1974, as amended, Public Law 93-383.
To provide mortgage insurance to HUD-approved lenders for the purchase or refinancing of existing multifamily housing projects, whether conventionally financed or subject to federally insured mortgages at the time of application for mortgage insurance. The program allows for the long term mortgages that can be financed with Government National Mortgage Association (GNMA) Mortgage-Backed Securities Program.
TYPES OF ASSISTANCE:
USES AND USE RESTRICTIONS:
HUD, through the Federal Housing Administration, insures lenders against loss on mortgage loans. These loans may be used to purchase or refinance existing multifamily housing projects. Only rental housing projects not requiring substantial rehabilitation are acceptable under this section. The estimated cost of required repairs may not exceed 15 percent of the estimated value after repairs or $6,500 per unit, adjusted by a high cost factor, whichever is greater and may not involve the replacement of more than one major system. 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-value and debt service limitations.
Applicant Eligibility: Mortgagors may be either private or public. The property must consist of not less than 5 living units and must meet the following criteria: (a) Three years must have elapsed from the later of the date of completion of the project construction or substantial rehabilitation, or beginning of occupancy to date of application for mortgage insurance; and (b) remaining economic life must be long enough to permit at least a 10-year mortgage term.
Pre-application Coordination: For Traditional Application Process (TAP) before the application is filed, the sponsor has a pre-application conference with local HUD Multifamily Hub and Program Center Staff. For Multifamily Accelerated Processing (MAP) there is no preapplication stage for Section 223(f). The MAP-approved lender prepares and submits the application for a Firm Commitment, including a full underwriting package for HUD Multifamily Hub or Program Center review. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.
Formula and Matching Requirements: The maximum amount of the loan will not be in excess of 85 percent of the Commissioner's estimate of value. For the first year there is a 1 percent mortgage insurance premium; thereafter, a .5 percent mortgage insurance premium will be applied.
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 term must be reported. All mortgagors are required to submit annual financial statements to HUD. All approved mortgagees at any time upon request by HUD must furnish copies of their latest financial statements.
Account Identification: 86-4077-0-3-371.
In fiscal year 2001, HUD insured 97 projects with 16,028 units, totaling $535.5 million. The Department expects to insure similar number of loans in fiscal year 2002.
REGULATIONS, GUIDELINES, AND LITERATURE:
Fact Sheet, Section 223(f) Mortgage Insurance; 24 CFR 200, HUD Handbook 4565.1, Mortgage Insurance for the purchase or Refinancing of Existing Multifamily Housing Projects, Section 223(f).
Regional or Local Office: See Regional Agency Offices. Persons are encouraged to communicate with the nearest local HUD Multifamily Hub or Program Center listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or the nearest HUD Field Office listed in Appendix IV.
EXAMPLES OF FUNDED PROJECTS:
RITERIA FOR SELECTING PROPOSALS: