FEDERAL AGENCY:

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

AUTHORIZATION:

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:

Guaranteed/Insured Loans. Place Cursor Here for Definition

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.

ELIGIBILITY REQUIREMENTS:

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.

Beneficiary Eligibility:   All persons are eligible to occupy such projects subject to normal occupancy restrictions.

Credentials/Documentation:   Documentation regarding the characteristics of the property and the qualifications of the purchaser or existing mortgagor in refinance projects are assembled by the mortgagee and submitted with the application. Management plan must be submitted at time of application for commitment. This program is excluded from coverage under OMB Circular No. A-87.

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.

Application Procedure:   The applicant will submit a formal application for conditional or firm commitment through a HUD approved mortgagee. This program is excluded from coverage under OMB Circular No. A-110. An environmental assessment is required.

Award Procedure:   The local HUD Multifamily Hub and Program Center reviews the application to determine proposal eligibility. If the project meets program requirements, the local HUD Multifamily Hub and Program Center issues the commitment to the lender to insure the project.

Deadlines:   Deadlines are established on a case-by-case basis.

Range of Approval/Disapproval Time:   Processing time depends on the degree of preparation of the sponsor, and whether MAP or TAP is used.

Appeals:   If an application for mortgage insurance is denied, HUD will state the reasons for denial.

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:   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.

Length and Time Phasing of Assistance:   The mortgage term should not be less than 10 years nor should it exceed the lesser of 35 years or 75 percent of the estimated remaining economic life of the physical improvements.

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.

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 $645,891,737; FY 02 est $951,078,791; FY 03 est $960,000,000.

Range and Average of Financial Assistance:   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.

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).

INFORMATION CONTACTS:

Regional or Local Office:   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.

Headquarters Office:   Office of Multifamily Development, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410. Telephone: (202) 708-1142. Use the same number for FTS.

Web Site Address:   http://www.hud.gov/fha/mfh/fhamfbus.html

EXAMPLES OF FUNDED PROJECTS:

Not applicable.

RITERIA FOR SELECTING PROPOSALS:

Not applicable.