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Exciting Changes at HUD

February 3, 2016

From our Newsletter: HUD MIP and MAP Guide Changes

February 2, 2016

Love Funding Q1 2016 Quarterly Newsletter HUD Changes

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It has been a busy couple of weeks for HUD, and we wanted to share with you some recent changes that will impact how we underwrite your loans. The most significant changes include:

  • Lower MIP rates for qualified affordable and energy efficient properties
  • The issuance of the new MAP Guide on January 29

This newly published information will provide savings for many qualified properties. We’ve included an overview below, and please contact your Love Funding originator to learn more.


Reduced MIP Fees For Qualified Properties

For commitments issued or reissued beginning April 1, 2016, many transactions will now qualify for lower MIP rates. Additionally, HUD Deputy Director Dan Sullivan advised that if a loan is in processing (i.e. the loan did not and will not close before April 1), lenders may submit amended Firm Commitment Applications reflecting the new MIP if the lender anticipates closing the loan on or after April 1 and the property and financing terms meet relevant requirements. Continue reading


New Guide for Multifamily Accelerated Processing

HUD released the new MAP (Multifamily Accelerated Processing) Guide, which will take effect on May 28, 2016, and applies to all loans for which an initial application for Firm Commitment is submitted on or after the effective date.

Loans where the Firm Commitment application was submitted before the effective date are subject to the provisions of the MAP Guide published in 2011; however, HUD will accept lender requests to revise Firm Commitment applications already in processing to reflect provisions of the revised Guide that are appropriate for a particular transaction. Similarly, Multifamily Regional Center and Hub Directors may consider requests to amend Firm Commitments already issued but not yet closed; such requests may or may not be approved depending on the specific transaction terms. Continue reading

 

Reduced MIP Fees For Qualified Properties

February 2, 2016

For commitments issued or reissued beginning April 1, 2016, many transactions will now qualify for lower MIP rates. Additionally, HUD Deputy Director Dan Sullivan advised that if a loan is in processing (i.e. the loan did not and will not close before April 1), lenders may submit amended Firm Commitment Applications reflecting the new MIP if the lender anticipates closing the loan on or after April 1 and the property and financing terms meet relevant requirements.

Highlights include:

  • Broadly Affordable transactions will be reduced to 25 bps: Includes projects with 90% or greater of the units covered by either a Section 8 Project Based contract or affordability use restriction under the Low Income Housing Tax Credit Program.
  • Affordable* transactions will be reduced to 35 bps: Includes projects with between 10% to 90% of all units covered by either a Section 8 Project Based contract or affordability use restriction under the Low Income Housing Tax Credit Program.
    *HUD’s definition of Affordable has been broadened to include properties with inclusionary zoning, density bonus set-asides and other local affordability restrictions meeting the required tests. Please see your Love Funding originator for more detail.
  • Green/Energy Efficient Housing will be 25 bps. Qualified projects must:
    • Achieve (or will achieve and maintain) an industry recognized standard for green building. Examples of acceptable standards include Enterprise Green Communities Criteria, U.S. Green Building Council’s LEED-H, LEED-H Midrise, LEED-NC or ENERGY STAR Certification, to name a few.
    • Achieve (or will achieve) a score of 75 or better on the 1-100 Energy Star Score using EPA’s Portfolio Manager.
  • No change to Market Rate Housing, except those that meet the criteria for green and energy efficient housing.

Note that additional restrictions apply to many of these changes, such as the requirement for a minimum of 15 years remaining on the qualifying affordable use restriction and a requirement that owners agree to accept Section 8 vouchers on affordable transactions.

New MAP Guide Changes

February 1, 2016

HUD released the new MAP (Multifamily Accelerated Processing) Guide, which will take effect on May 28, 2016, and applies to all loans for which an initial application for Firm Commitment is submitted on or after the effective date.

Effective Date
Loans where the Firm Commitment application was submitted before the effective date of May 28, 2016, are subject to the provisions of the MAP Guide published in 2011; however, HUD will accept lender requests to revise Firm Commitment applications already in processing to reflect provisions of the revised Guide that are appropriate for a particular transaction. Similarly, Multifamily Regional Center and Hub Directors may consider requests to amend Firm Commitments already issued but not yet closed; such requests may or may not be approved depending on the specific transaction terms.

Explanation of Changes
A draft of the new MAP Guide was published in February 2015, and a series of conference calls was held to obtain public and industry feedback on the proposed MAP Guide revisions. HUD received over 4,000 comments. The most significant issues have been addressed and HUD’s response is summarized in this explanatory matrix. HUD will continue to consider edits and corrections in a future version.

Significant Changes
The updated MAP Guide has been under revision since February 2015, and Love Funding has been heavily involved in providing feedback on the proposed changes. Some of the most significant changes include:

  • The ability to provide more loan dollars for qualified properties due to less stringent coverage requirements and higher underwritten LTVs
  • The ability to include more repairs in your mortgage under section 223(f) due to an increase in the maximum per unit cost of rehabilitation allowed
  • More updates to come

Love Funding Secures $9.1 Million Loan for Refinancing of JASA Affordable Senior Housing in Brooklyn, New York

January 11, 2016

Scheuer House of Coney IslandLove Funding, one of the nation’s leading providers of FHA multifamily, affordable, and healthcare financing, is pleased to announce the closing of a $9.1 million loan for the refinancing of JASA’s Scheuer House of Coney Island. Scheuer House is an affordable senior housing property in Brooklyn, New York.

Laura Saull-Smith, Senior Director of Love Funding, secured the loan through the U.S. Department of Housing and Urban Development (HUD)’s 223(f) program. This program enabled the borrower, JASA, to preserve rent-subsidized units at the property, fund more than $4.8M in repairs and reserves, provide additional equity to use for future projects and move to 35-year non-recourse debt at a historically low, fixed interest rate.

According to JASA’s Director of Housing Donald Manning, “Affordable housing demands in the New York City area far exceed the existing supply. All of our buildings have waitlists because JASA has a reputation for providing high-quality, affordable and secure housing for older adults and disabled individuals in prime locations.”
Continued…

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Calendar

NH&RA Annual Meeting

Senior Director Holly Bray, Director David Opalek and Deputy Chief Underwriter Angela Folkers will be attending the 2016 NH&RA Annual Meeting February 24-27, 2016 in West Palm Beach, FL. Contact us today to schedule a meeting to discuss your financing needs at the conference.

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