Mortgage Insurance-Two Year Operating Loss Loans, Section 223(d) (14.167)

Program

14.167 Mortgage Insurance-Two Year Operating Loss Loans, Section 223(d)

Federal Agency

Agency: Department of Housing and Urban Development
Office: Office Of Housing-federal Housing Commissioner

Authorization

National Housing Act, as amended, Public Law 90- 448, as amended, Public Law 91-152, 12 U.S.C. 1715x.

Program Number

14.167

Last Known Status

Active

Objectives

To insure a separate loan covering operating losses incurred during the first 2 years following the date of completion or any other 2-year period occurring within 10 years following the date of completion of a multifamily project with a HUD-insured first mortgage.

Types of Assistance

GUARANTEED/INSURED LOANS

Uses and Use Restrictions

Eligibility is limited to currently insured HUD projects. Section 223(d) insures a loan to cover the excess of expenses over project gross income incurred during the first two years following the date of completion of the project or for any other two-year period within 10 years of project completion, for such amounts and upon such terms and conditions as HUD may prescribe. A project can receive both loans but not for the same two year period. The loan is insured by HUD under the same section as the original mortgage in an amount not exceeding the excess of operating expenses over project income. The loan term is limited to the unexpired term of the original mortgage. This program requires appropriated credit subsidy, which is limited.

Eligibility Requirements

Applicant Eligibility

Owners of a multifamily project or facility subject to a mortgage insured by HUD are eligible to apply.

Beneficiary Eligibility

Individuals/families and property owner.

Credentials/Documentation

A formal application for insurance accompanied by a financial statement prepared by an independent certified public accountant or independent public accountant. This program is excluded from coverage under OMB Circular No. A-87. This program is excluded from coverage under OMB Circular No. A-87.

Application and Award Process

Preapplication Coordination

Preapplication coordination is required. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.

Application Procedure

This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110. The sponsor submits a formal application through a HUD-approved mortgagee to the local HUD Multifamily Hub or Program Center. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure

Information submitted by the applicant will be reviewed and analyzed using data available through office records, field review and general current working knowledge of the project and background. A determination is then made as to the maximum insurable loan amount.

Deadlines

Contact the headquarters or regional office, as appropriate, for application deadlines.

Range of Approval/Disapproval Time

Processing time will be dependent upon the degree of preparation by the sponsor and HUD Multifamily Hub or Program Center workload.

Appeals

From 15 to 30 days. If an application for operating loss loan is refused, HUD will state the reason for the refusal.

Renewals

Not Applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula.

This program has no matching requirements.

This program does not have MOE requirements.

Length and Time Phasing of Assistance

The loan may not exceed the remaining term of the insured mortgage. Method of awarding/releasing assistance: lump sum.

Post Assistance Requirements

Reports

Audits

This program is excluded from coverage under OMB Circular No. A-133. HUD reserves the right to audit the accounts of the mortgagee or mortgagor to determine compliance and conformance with HUD regulations and standards.

Records

Mortgagees are required to service and maintain records in accordance with acceptable practices of prudent lending institutions and the HUD regulations.

Program Accomplishments

Not Applicable.

Financial Information

Account Identification

86-4077-0-3-371.

Obligations

(Guaranteed/Insured Loans) FY 08 $11,000,808; FY 09 est $12,000,000; FY 10 est $13,000,000

Range and Average of Financial Assistance

Loans sizes range from $750,000 to $7,000,000 with an average of $2.0 million. Project sizes range fro 117 to 210 units with an average of 151 units.

Regulations, Guidelines and Literature

24 CFR 207.4(f) et seq; HUD Handbook 4470.1 REV-2 CHG-1 (Chapter 17), "Operating Loss Loans", no charge, available on HUDCLIPS at http://www.hudclips.org.

Related Programs

Not Applicable.

Information Contacts

Regional or Local Office

See Regional Agency Offices. All projects are processed in HUD Multifamily Hubs or Program Centers. Persons are encouraged to communicate with the nearest local Multifamily Hub or Program Center. These offices are listed under HUD resources on the Multifamily industry website at: http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm.

Headquarters Office

Dorothy J. Matthews 451 7th Street, S.W., Room 9139, Washington, DC 20410, Washington, District of Columbia 20410 Email: Dorothy.J.Matthews@hud.gov Phone: 2024024177

Web Site Address

http://www.hud.gov/offices/hsg/hsgmulti.cfm.

Examples of Funded Projects

Not Applicable.

Criteria for Selecting Proposals

Not Applicable.