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FHA Extends Apartment Building Refinancing Waiver
Responding to concerns voiced by NAHB, the Department of Housing and Urban Development announced on July 29 that it was extending for six months a waiver enabling multifamily developers to use the Federal Housing Administration’s Section 223(f) program to finance properties that have been operating for less than three years.
The program is usually only available to finance properties that have been operating for at least three years.
HUD’s Mortgagee Letter 2009-22 said that the waiver was being extended for the purpose of “providing liquidity to recently constructed or substantially rehabilitated, self-sustaining properties that are unable to secure permanent long-term financing due to the freeze in the capital markets.”
Recognizing the need to provide liquidity to the multifamily marketplace, HUD initiated the waiver of the Section 223(f) three-year rule in February.
HUD previously waived the three-year rule from June 1974 through the end of 1975 when the industry was experiencing a credit-crunch similar to today’s and otherwise sound projects were unable to obtain permanent financing.
“Our members indicate that the current situation is actually much worse and will require special action extending [the waiver] for at least 18 months, if not more,” NAHB told then-FHA Commissioner Brian Montgomery just after the three-year waiver was temporarily authorized early this year.
In its recent announcement, HUD said that it will evaluate the effectiveness of the waiver and might elect to extend it.
HUD also responded to NAHB’s concern that some of the requirements and restrictions contained in the February waiver notice that are not normally required of Section 223(f) loans posed unnecessary obstacles to participation in the program.
Of note, in its extension of the waiver HUD eliminated a prohibition against the participation of projects that had previously applied for mortgage insurance under other HUD programs and then had withdrawn their application.
Properties with a certificate of occupancy less than three years prior to the date of application for a firm commitment are eligible for the waiver.
For more information, e-mail Claudia Kedda at NAHB, or call her at 800-368-5242 x8352.
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