|Home | En Español | Contact Us | A to Z|
HUD Archives: News Releases
FHA ANNOUNCES MORTGAGE INSURANCE PROCESSING
FOR SMALL RENTAL APARTMENT PROJECTS
Federal Housing Administration (FHA) Commissioner Nicolas P. Retsinas today announced the availability of new mortgage insurance processing and underwriting procedures for small multifamily rental projects.
"In certain areas, FHA must be a better partner in building neighborhood-scale properties that can fill special housing needs without overwhelming the community with large-scale developments," Retsinas said. "FHA's small property processing initiative will help fill this niche by streamlining and expediting the underwriting process for financing of smaller residential buildings."
Small Project Processing (SPP) was developed after FHA's consultations with the multifamily housing industry identified the small project market as being underserved and having unique problems in loan origination and finance.
The SPP modifies some of the current procedures applicable to FHA's Section 221(d)(4) and 223(f) programs to permit faster, more flexible processing by participating lenders and FHA. It will permit maximum insured mortgage amounts of up to $1 million for newly constructed, substantially rehabilitated and existing properties of between five and 20 units for purchase or refinance.
SPP will delegate to mortgage lenders many of the processing functions normally performed by FHA. Because of increased lender involvement, FHA will be able to issue firm commitments and endorse mortgages for insurance in a much more timely manner.
Additional characteristics of SPP include: lenders must be FHA approved mortgagees; fully amortizing, fixed rate mortgages for up to 30 years for existing properties and 35 years for new construction and substantial rehabilitation; loan to value ratios
of up to 80 percent for the purchase or refinance of existing properties and up to 85 percent for new construction and substantial rehabilitation; and owner-certified annual financial statements.
The Government National Mortgage Association (GNMA) has developed a mortgage-backed securities program which will enable lenders to pool multiple SPP mortgages with the same interest rate for sale in the secondary market. This will enable lenders in the small projects market to increase their volume of small project lending.
"This new process will help promote construction of affordable rental housing in underserved rural and inner city markets," said Kent Colton, executive vice president of the National Association of Home Builders (NAHB). "More specifically, it will help builders and owners who construct and own small projects, between 5 to 20 units, in finding affordable financing. We have enjoyed working with HUD in the development of these new procedures and look forward to helping HUD implement the process quickly and efficiently."
According to Shekar Narasimhan, President & CEO, Washington Mortgage Financial Group, Ltd., Vienna, Virginia, "Streamlined processing for small project loans will greatly facilitate the construction, rehabilitation and preservation of affordable housing in underserved markets. We are hoping that these new mortgage insurance processing and underwriting procedures will lead to a new way of doing business with FHA with significantly more delegation to qualified mortgagees."
A series of symposiums are scheduled for February and March to introduce the SPP to the multifamily industry, including lenders, borrowers and owners. The symposiums will be held in the cities and on the dates indicated below:
Content Archived: January 20, 2009