Apartments - Refinance of Existing HUD Insured Loan
HUD Section 223(a)(7) Mortgage Insurance Programs

(http://www.rockportmortgage.com:80/print/termsheets/apartments/223a7.php)

Purpose
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.
Eligible Borrowers
Profit motivated, non-profit motivated and public owners are eligible.
Maximum Term
The term of the new mortgage may not exceed the remaining term of the existing mortgage, except in special cases where due to the project feasibility, FHA may extend the new term up to 12 years beyond the term of the original mortgage.
Maximum Loan
the lesser of:
1. The original principal amount of the existing insured mortgage;
2. The unpaid principal balance of the existing insured mortgage plus the cost of required repairs, improvements, outstanding debt incurred in connection with capital improvements (as approved by the HUD field office), prepayment penalties, and loan closing costs;
3. The amount that can be supported by 90% of next operating income (95% if owner is non-profit).
Personal Liability
None
Prepayment
Typically closed for two years then open to prepayment in year three with an 8% penalty, declining 1% per year.
FHA Application Fees
0.3% of the loan amount. After endorsement of the new mortgage note, HUD will approve a request for up to one-half, or 0.15%, of the application fee.
Mortgage Insurance Premiums
0.45% of the outstanding loan amount.
Financing Fee
Negotiable
Interest Rate
Subject to market conditions.
Territory
Nationwide
Interest Rate
Subject to market conditions.
Additional Program Parameters
  • The program is available for fully insured mortgages or coinsured mortgages that have been converted to full insurance.
  • Funds to cover minor repairs and costs of the transaction can be included in the mortgage loan. Outstanding debt incurred in connection with capital improvements already made to the property may also be included in the mortgage loan, subject to FHA approval.
  • The term of the new mortgage may not exceed the remaining term of the existing mortgage though FHA may extend the new term up to 12 years beyond the term of the original mortgage if it is required for the project feasibility.
  • Loans insured under HUD Section223(a)(7) assume program characteristics of the underlying mortgage insurance program.
  • Processing HUD Section 223(a)(7) applications usually takes 30-45 days.