HUD and the Federal Housing Administration (FHA) issued a final notice on the Small Multifamily Building Risk Share Initiative.
Through this Final Notice, HUD invites applications for the Initiative from high capacity Community Development Finance Institutions (CDFIs), other nonprofit lenders, and public and quasi-public agencies, and private, for-profit lenders approved as FHA Multifamily Accelerated Processing(MAP) lenders to participate in HUDs Risk Sharing Program. Under the Initiative, qualified applicants will rely on a 50 percent risk sharing arrangement with HUD to underwrite, originate, and service loans that (1) are secured with properties of 5 or more rental dwelling units, and (2) do not exceed the amount of $3,000,000, or, in the case of projects located in High Cost Areas annually designated by HUD, the amount of $5,000,000.
Also stated in this notice is HUDs intentions to pursue statutory changes to Section 542(b) of the Housing and Community Development Act of 1992 that would, through loans originated by lenders that have demonstrated experience in affordable housing lending, remove affordability restrictions currently required under Section 542(b). The change is intended to reduce the burden on owners who access this capital in order to provide affordable housing in their communities. The language would also authorize Ginnie Mae to securitize loans on small buildings made under Section542(b), which could significantly enhance the impact and utility of the initiative.
To view this final notice on the NAHMA website, please click here
To view a press release from HUD regarding this notice, please click here