About 90% of the projects in the FHA’s multifamily portfolio have mortgages of less than $50 million. The $50 million threshold for terrorism insurance will be implemented through a HUD rulemaking process beginning in coming months. The requirement will affect only new applications for FHA insurance, not existing mortgages.
Following the Sept. 11 terrorist attacks, primary insurance companies began excluding or eliminating coverage for acts of terrorism in catastrophic loss insurance policies, including policies covering multifamily properties. Where the coverage is available, costs are high, terms are restrictive and coverage limits are low.
According to HUD, a typical 100-unit apartment generates 112 jobs and contributes $5.3 million to the local economy in the year that it is built. In subsequent years, the development produces 46 jobs and $2.2 million in economic activity annually.
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