On February 10, HUD unveiled the first phase of a new pilot program to test an accelerated FHA insurance approval process for Housing Credit development loans under the Federal Housing Administration’s (FHA) Section 223(f) program. HUD is launching the pilot in response to a provision in the Housing and Economic Recovery Act of 2008 (HERA) requiring FHA to streamline mortgage insurance applications for developments financed with Housing Credit equity.
HUD will offer the pilot through its multifamily offices, or hubs, in Boston, Chicago, Detroit, and Los Angeles. HUD’s goal is to issue firm commitments within 60-90 calendar days after a completed application is submitted, and to close loans within 90-120 calendar days of submission.
This first phase of the pilot program will permit applications for permanent financing processed under Section 223(f) for properties that are recently constructed and occupied, for preservation and moderate rehabilitation of properties with Section 8 rental assistance, and for older, stabilized Housing Credit properties through the syndication of new Credits. The financing being made available under the pilot can be used with taxable or tax-exempt bonds.
Housing Credit applications submitted under programs that are not eligible for the pilot program or in offices where the pilot is not yet offered will continue to be processed under HUD’s standard Multifamily Accelerated Processing (MAP) Guide, which is intended to cut the time required to approve loan applications and to assure consistent application of program requirements and credit standards across all HUD processing offices.
HUD has not yet indicated when it plans to unveil subsequent phases of the pilot or nationwide implementation of the program.