The multifamily market today is witnessing a number of "derivative" products and structures that attempt to achieve the lowest rates. Nonetheless, government programs such as FHA mortgage insurance still provide one of the most attractive long term, non-recourse, permanent financing vehicles for projects that qualify from both a programmatic and financial perspective. With the FHA's implementation of "MAP", processing time has been reduced to as few as 45 days in HUD offices.
As the mortgage insurance provider of HUD, FHA will insure mortgages to finance the acquisition, new construction, substantial rehabilitation and refinance of multifamily projects nationwide. Loans are funded on a taxable basis, can be swapped for Government National Mortgage Association Mortgage-Backed Securities, or can be used as credit enhancement for tax-exempt bond issues. Projects can be insured by FHA "market" rate, affordable housing, or low-income housing programs. HUD does not require low-income tenancy set-asides nor does it impose rent limits on insured projects, though the use of tax-exempt bonds or low income housing tax credits can trigger these requirements.
The FHA Mortgage Insurance Programs are available and may provide the most practical and attractive financing mechanism for financing the following:
| FHA PROGRAM | PURPOSE |
|---|---|
| Section 223(f) | REFINANCE & ACQUISITION |
| Provides mortgage insurance for existing apartment projects to facilitate either the refinancing or purchase of projects at least three years old. Available for profit motivated or non-profit borrowers. | |
| Section 221(d)(4) | NEW CONSTRUCTION & SUBSTANTIAL REHABILITATION |
| Provides mortgage insurance for proposed apartment projects and rehabilitations including elderly projects. | |
| Section 223(a)(7) | REFINANCE OF EXISTING HUD INSURED LOAN |
| Provides mortgage insurance in connection with the refinance of projects currently insured by FHA. Available for profit motivated or non-profit borrowers and multi-family or health care facilities. |
| FHA PROGRAM | PURPOSE |
|---|---|
| Section 232 Pursuant to 223(f) | REFINANCE & ACQUISITION |
| FHA’s Section 232 Program was recently amended to provide mortgage insurance for the refinance of conventional (non-FHA insured) nursing homes, intermediate care facilities, board and care homes and assisted living facilities (collectively, "Residential Care Facilities"). | |
| Section 232 | NEW CONSTRUCTION & SUBSTANTIAL REHABILITATION | Provides mortgage insurance for the construction or rehabilitation of skilled nursing, intermediate care, board and care, and assisted living facilities. |
| Section 223(a)(7) | REFINANCE OF EXISTING HUD INSURED LOAN | Provides mortgage insurance in connection with the refinance of projects currently insured by FHA. Available for profit motivated or non-profit borrowers and multi-family or healthcare projects. |
(Providence, RI)
(Poughkeepsie, NY)
(Manning, SC)
(Hyattsville, MD)
(Suffield, CT)
(Philadelphia, PA)
