WASHINGTON, D.C. – November 14, 2013 – (RealEstateRama) – HUD has issued a notice/request for comment on a proposed new “Small Multifamily Building Risk Share Initiative” intended to give owners of small rental properties access to longer term, fixed rate financing for rehabilitation and refinancing. The initiative would allow qualified Community Development Finance Institutions (CDFIs) and other “mission motivated” financial institutions or lending consortia to participate in HUD’s Risk Sharing Program for loans to owners of small multifamily rental and co-op properties (5-49 units). It could also be used in connection with small loans (up to $3 million) on properties of any size. The loans would be eligible for HUD mortgage insurance and lenders would share any default losses 50/50 with HUD. The proposal reflects recommendations by the National Housing Conference and others in 2012. The comment deadline is January 3, 2014.
HUD intends to invite CDFIs and others to apply to participate once comments are received and any revisions to the notice are made.
Currently, the Initiative is restricted to “affordable housing”, as required under Section 542(b) of the Housing and Community Development Act and implemented through a housing notice and negotiated agreements without regulations. The proposed notice for the Initiative requires that at least 20% of the units be rent restricted and occupied by households at or below 50% of area median income (or 40% at 60% of AMI). However, the Administration has proposed a statutory change to remove the affordability requirement as part of its FY2014 budget request. The notice states that if that request is granted, HUD intends to implement it. The National Low Income Housing Coalition has expressed concern about the vagueness of the affordability requirement in the notice and the proposed change.