HUD to Allow FHA Multifamily Mortgage Insurance for Projects Under Construction
HUD has issued Mortgagee Letter 2009-26 which provides temporary authority to provide FHA multifamily mortgage insurance under the Sections 221, 221(d)3 and (d)4 and Section 231 programs to projects that have been unable to complete construction due to a loss of funding. The parameters of the authority are fairly narrow in that only non-HUD-insured new construction apartment projects that have started or completed site improvements and building foundation work are eligible.
Additionally, all construction work must have stopped before an application for FHA insurance is submitted, and construction cannot commence until the project receives initial endorsement. Davis- Bacon wage rates will apply to all construction work going forward, but will not be applied retroactively to the construction in place. Submission of a new (not updated) appraisal and market study also is required.
The temporary authority is effective for the next six months, at which point HUD will evaluate the effectiveness of the waiver and may elect to extend the program if warrented.
For more information, e-mail Claudia Kedda or call her at 800-368-5242 x8352.
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