HUD Frees Up FHA Insurance for Multifamily Refinancing
The U.S. Department of Housing and Urban Development recently made it easier for multifamily developers to use Federal Housing Administration (FHA) mortgage insurance for the refinancing of existing properties.
Under normal circumstances, the Section 223(f) program provides mortgage insurance to refinance properties that have been operating for at least three years. However, because of today’s severe economic conditions and constrained liquidity in the multifamily markets, HUD is waiving the three-year rule.
The waiver program comes at a time when NAHB’s multifamily members have been reporting growing difficult in refinancing completed, self-sustaining properties due to the intensifying credit market crisis.
The waiver program will be in effect for the next six months, after which HUD may possibly extend it.
The final loan amount that can be refinanced is limited to what is sufficient to pay off existing indebtedness — as defined by HUD and subject to mortgage loan limits and a valuation analysis — and cannot include an equity payment to the owner. Mortgage loan limits vary by type of structure (garden or high-rise) and geographic location.
In addition, mortgage loan limits are adjusted upward in geographic areas with high construction costs. To see the mortgage loan limits, which are published by HUD on its Web site, click here.
For HUD’s list of approved FHA multifamily lenders, click here.
The waiver program does include some requirements and restrictions that are not normally required of Section 223(f) loans. NAHB has sent a letter to FHA Commissioner Brian Montgomery asking HUD to reconsider some of these. The letter also asked him to keep the waiver program in effect for at least 18 months.
Save the Date
NAHB will host a webinar on two of the major FHA multifamily mortgage insurance programs on April 22 from 2:00 p.m. to 3:00 p.m. EST. Registration information will be posted on NAHB’s Web site soon.
The webinar will cover the Section 223(f) refinancing program, as well as the Section 221(d)(4) program for new construction/substantial rehabilitation. This is an excellent opportunity to learn about these programs and whether they can help you finance your next multifamily development.
For more information, e-mail Claudia Kedda or Carmel McGuire at NAHB.