HUD announced yesterday that its Federal Housing Administration will not require insurance coverage against acts of terrorism on multifamily mortgages of less than $50 million, a move designed to encourage the continued production of multifamily housing developments.

Secretary Martinez said the move demonstrates the Administration's commitment to promoting the production of affordable housing as it wages war on terrorism.

Approximately 90 percent of the projects in the FHA's multifamily portfolio have mortgages of less than $50 million. A typical 100-unit apartment generates 112 jobs and contributes $5.3 million to the local economy, just in the year that it is built. In subsequent years, the development produces a further 46 jobs and $2.2 million in economic activity annually.

Following the September 11 terrorist attacks, primary insurance companies began excluding or limiting coverage for acts of terrorism in catastrophic loss insurance policies, such as those that cover multifamily properties.

The $50 million threshold will be implemented through HUD's rulemaking procedures, beginning with the publication of a proposed rule for comment in the coming months. The requirement will affect only new applications for FHA mortgage insurance.