FEDERAL
AGENCY:
HOUSING,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AUTHORIZATION:
Housing
and Community Development Act of 1992, Section 542(b), Public Law
102-550, 12 U.S.C. 1701; Public Law 106-377. HUD's fiscal year 2001
Appropriations Bill amended Section 235 of the Housing and Community
Development Act of 1992 to extend the 542 Risk Sharing Program to
a permanent multifamily insurance program.
Under
this program HUD provides reinsurance on multifamily housing projects
whose loans are originated, underwritten, serviced, and disposed
of by qualified participating entities (QPEs) and/or its approved
lenders. The program encourages the development and preservation
of affordable housing. The Section 542(b) program was originally
designed as a pilot to test innovative mortgage insurance and reinsurance
products to provide affordable multifamily housing through a partnership
between HUD and QPEs, including Government Sponsored Enterprises,
financial institutions, and the Federal Housing Finance Board.
TYPES
OF ASSISTANCE:
Guaranteed/Insured Loans.
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USES
AND USE RESTRICTIONS:
QPEs
and/or its approved lenders may originate and underwrite affordable
housing loans. HUD's mortgage credit enhancements are used to support
the underwriting and production strengths of Fannie Mae, Freddie
Mac, and other qualified Federal, State, and local public financial
and housing institutions. In the event of a default, the QPE will
pay all costs associated with loan disposition and will seek reimbursement
from HUD. In most cases, the HUD risk share will be 50 percent.
The program provides a new insurance authority independent of the
National Housing Act.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Eligible mortgagors include investors,
builders, developers, public entities, and private nonprofit corporations
or associations may apply to a qualified QPE and/or its lender.
Beneficiary
Eligibility: Individuals, families, and property
owners may be eligible for affordable housing.
Credentials/Documentation:
Documentation regarding the characteristics of the property and
the qualifications of the mortgagor are submitted to the QPE and/or
its lender.
APPLICATION
AND AWARD PROCESS:
Pre-application
Coordination: An applicant should consult the
QPE as the single point of contact for more information on the process.
The sponsor will have a preapplication meeting with the QPE. This
program is excluded from coverage under E.O. 12372.
Application
Procedure: An applicant submits a formal application
directly to the QPE.
Award
Procedure: QPEs are vested with the maximum
amount of processing responsibilities and decision-making to approve
or reject individual projects.
Deadlines:
Deadlines are established on a case-by-case basis by the QPE.
Range
of Approval/Disapproval Time: Within 15 days
of HUD's receipt of a complete and acceptable Risk Sharing Request,
HUD will execute the Addendum to Risk Sharing Agreement which
signifies that HUD has undertaken a Risk Sharing Obligation for
a specific mortgage loan.
Appeals:
If a Risk Sharing Request is refused, HUD will state the reasons
for the refusal.
Renewals:
HUD will provide reinsurance on multifamily housing projects whose
loans are originated, underwritten, serviced, and disposed of
by QPEs.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: The program is a
pilot designed to assess the feasibility of risk-sharing partnerships
between HUD and qualified participating entities.
Length
and Time Phasing of Assistance: Legislation
has been enacted to make this program permanent.
POST
ASSISTANCE REQUIREMENTS:
Reports:
QPEs must submit a bi-annual report listing (1) the original mortgage
amount and outstanding unpaid principal balance for each reinsured
loan, and (2) the status of the reinsured loan.
Audits:
The Department of Housing and Urban Development reserves the right
to audit the Mortgage Loans which HUD has reinsured.
Records:
QPEs are required to service and maintain records in accordance
with acceptable mortgage practices of prudent lending institutions.
FINANCIAL
INFORMATION:
Account
Identification: 86-4077-0-3-371.
Obligations:
(Insured Loans) FY 01 $1,449,318; FY 02 est $100,000,000; and
FY 03 est $105,000,000.
Range
and Average of Financial Assistance:
Loan sizes range from $889,000 to $8,000,000 with an average of
some $7.3 million. Project sizes range from 48 to 397 units
with an average of 191 units.
PROGRAM
ACCOMPLISHMENTS:
In fiscal year 2001, HUD insured three mortgage loans totaling $21
million. The Department expects to insure a similar number of mortgage
loans in fiscal year 2002.
REGULATIONS,
GUIDELINES, AND LITERATURE:
Pilot program implemented without regulations.
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 the Catalog Address 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.
CRITERIA
FOR SELECTING PROPOSALS:
Not applicable.
