|HUD No. 00-314|
|Further Information:||For Release|
|In the Washington, DC area: 202/708-0685||Friday|
|Or contact your local HUD office||October 27, 2000|
GINNIE MAE AND OMHAR ANNOUNCE A NEW MULTIFAMILY MORTGAGE-BACKED SECURITY FOR FHA-INSURED MARK-TO-MARKET LOANS
WASHINGTON — The Government National Mortgage Association (Ginnie Mae) and the Office of Multifamily Housing Assistance Restructuring (OMHAR) announced today that a new loan security product has been developed that will enable Ginnie Mae to securitize loans originated under HUD’s Mark-To-Market (M2M) program.
The Mark-to-Market program, which is administered by OMHAR, was created in 1997 to reduce above market Section 8 rent payments on thousands of privately owned, federally subsidized rental units to levels more in line with prevailing market rent levels, while preserving a critical part of this nation’s affordable housing stock.
"By increasing the liquidity of investment capital available to the multifamily mortgage finance market, Ginnie Mae continues to fulfill its mandate to promote access to mortgage credit," said George S. Anderson, Executive Vice President of Ginnie Mae. "Ginnie Mae is proud to be a partner with OMHAR in its effort to preserve the affordability and availability of low income rental housing."
Ira G. Peppercorn, director of OMHAR, said: "Ginnie Mae’s new product is a win for lenders, investors, owners, and residents. Along with the solid market-based underwriting of M2M deals and the prudent use of FHA multifamily loan insurance, the new product will help facilitate the flow of private capital from private credit markets to the Mark-to-Market program."
The M2M program has two basic goals: preserving the affordable housing stock by maintaining the long-term physical and financial integrity of certain privately-owned, HUD-subsidized rental housing units insured by FHA; and reducing long-term project-based Section 8 rental assistance costs and the cost of insurance claims paid by FHA.
OMHAR has more than 1,200 Section 8 properties assigned to Participating Administrative Entities -- public and private housing finance agencies contracted to process M2M transactions -- with billions of dollars in debt restructuring expected. A modification of an existing loan, or new take out financing, will be required to complete successful restructuring transactions.
M2M debt restructurings use conservative conventional underwriting, with special attention paid to the rehabilitation needs and long-term viability of properties to continue their use as affordable housing.
Approved multifamily issuers can begin to submit loan pools supported by the new product immediately to The Chase Manhattan Bank, Ginnie Mae’s pool processing agent, for December 2000 issuance.