HUD has published a much-anticipated draft of proposed rules that will bring important changes to FHA multifamily programs, changes that could increase leverage, lower borrowing costs, and streamline the loan process.
For new construction, the proposed changes include:
- Reducing escrows for working capital.
- Moving construction contingency into the loan.
- Eliminating more stringent underwriting for large loans.
For refinancing, the proposed rules would:
- Offer greater flexibility for newly built projects.
- Recognize tax abatements in valuing properties.
- Allow underwriting to 95% occupancy for stabilized properties.