Loan Programs
FHA-insured loans in the Multifamily Accelerated Processing (MAP) program have a number of common features. They are all non-recourse, fixed rate, long term mortgages with no balloons, and declining pre-payment penalties. The government guarantee provides a very low interest rate. All borrowers pay a modest additional Mortgage Insurance Premium (MIP) for the life of the loan. The MAP program accommodates projects with certain age restrictions, some commercial space, ground leases, tax abatements, LIHTC, and multiple layers of secondary debt. No hotel space or Airbnb style rental is allowed.
Acquisition or Refinance
Section 223(f)
For existing and occupied rental apartments, including newly built communities reaching stabilization. Typically a 35-year term, with cash-out allowed at 75%-80% LTV based on value using market rents after repairs/renovations. The maximum amount of repairs and renovation will vary by location; in many areas it’s around $50,000/unit including contingency. No Davis Bacon wage requirements.
New Construction or Substantial Rehabilitation
Section 221(d) - Family Apartments, all Areas
Section 220 - Family Apartments, Urban Areas and Opportunity Zones Only
Section 231 - Elderly Only, all residents 62+
One-stop shopping for both an interest-only construction loan and a 40-year permanent loan. The perm loan is sized and the interest rate is locked before closing, eliminating risk for the borrower. Davis Bacon wages are required on all construction.
Streamlined Refinance of HUD-Insured Projects
Section 223(a)(7)
Typically used to reduce the interest rate and may also allow a reduction in MIP, resulting in significant annual debt service savings. Limited underwriting and review, includes only a modest amount of repairs, and does not allow cash-out. Payment of the existing loan’s pre-payment penalty can be built into the new rate, resulting in less interest savings but reducing the borrower’s refinance costs.
Tax Credit "Pilot" Program
Sections 220 and 221(d)(4)
Streamlined and accelerated processing of New Construction and Substantial Rehabilitation loans for projects obtaining new LIHTC investments. Also see Notice H 2019-03 and several subsequent FAQ’s.
Loan Modifications
(Interest Rate Reduction)
This restructuring method allows the existing Lender to modify the loan to reduce the interest rate and thus the debt service. This process involves redemption of the existing Ginnie Mae mortgage backed securities and replacing them with newly issued Ginnie Mae’s at a lower interest rate. MIP is not affected. Payment of the pre-payment penalty can be built into the new rate.
