Federal Housing Administration (FHA) Increases Frequency of Allowable Surplus Cash Distributions to Multifamily Borrowers

New requirements published today will free up capital more frequently for future multifamily development and align FHA requirements with industry practice

WASHINGTON - The Federal Housing Administration (FHA) announced today that it is increasing the frequency of allowable distributions of surplus cash to borrowers with most FHA-insured Multifamily mortgages from two times per accounting year to up to monthly distributions for eligible borrowers. This change will free up capital more frequently for use by borrowers in future Multifamily development and will align FHA income distribution rules with those used in private industry.

"This much-needed change better aligns FHA-insured mortgage financing with other capital sources, helping to maintain FHA's products as competitive offerings to finance the rental housing that so many communities need," said Deputy Assistant Secretary for Multifamily Housing Programs Ethan Handelman.

Borrowers with FHA-insured Multifamily properties not subject to a Section 8 rental assistance payment contract or a HUD-held mortgage note may be eligible to increase the frequency of their surplus cash distributions. In addition, FHA has retained existing risk management conditions, including current payments and reporting requirements, while expanding other conditions and enforcement actions.

About the Office of Multifamily Housing Programs

FHA's Office of Multifamily Housing Programs plays an important role in the construction, substantial rehabilitation and refinance of market rate and affordable housing through the issuance of FHA mortgage insurance. These insurance programs provide stability, liquidity, and affordability to the multifamily housing market by providing credit during countercyclical times and in small markets.

In fiscal year 2021, the Office of Multifamily Housing Programs achieved record-breaking volume of $29.5 billion in initial endorsements for mortgage insurance. View quarterly and historical data on FHA Multifamily volume here.

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