Qualified Participating Entities (QPE) Risk Sharing (14.189)

 

Program

14.189 Qualified Participating Entities (QPE) Risk Sharing

 

Federal Agency

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

Authorization

Housing and Community Development Act of 1992, Section 542(b), Public Law 102-550, 12 U.S.C. 1701; Public Law 106-377. HUD's fiscal year 2001 Appropriations Bill amended Section 235 of the Housing and Community Development Act of 1992 to extend the 542 Risk Sharing Program to a permanent multifamily insurance program.

 

Program Number

14.189

 

Last Known Status

Active

 

Objectives

Under this program HUD provides reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by qualified participating entities (QPEs) and/or its approved lenders. The program encourages the development and preservation of affordable housing. The Section 542(b) program was originally designed as a pilot to test innovative mortgage insurance and reinsurance products to provide affordable multifamily housing through a partnership between HUD and QPEs, including Government Sponsored Enterprises, financial institutions, and the Federal Housing Finance Board.

 

Types of Assistance

Guaranteed/Insured Loans.

 

Uses and Use Restrictions

QPEs and/or its approved lenders may originate and underwrite affordable housing loans. HUD's mortgage credit enhancements are used to support the underwriting and production strengths of Fannie Mae, Freddie Mac, and other qualified Federal, State, and local public financial and housing institutions. In the event of a default, the QPE will pay all costs associated with loan disposition and will seek reimbursement from HUD. In most cases, the HUD risk share will be 50 percent. The program provides a new insurance authority independent of the National Housing Act.

 

Eligibility Requirements

Applicant Eligibility

Eligible mortgagors include investors, builders, developers, public entities, and private nonprofit corporations or associations may apply to a qualified QPE and/or its lender.

Beneficiary Eligibility

Individuals, families, and property owners may be eligible for affordable housing.

Credentials/Documentation

Documentation regarding the characteristics of the property and the qualifications of the mortgagor are submitted to the QPE and/or its lender.

 

Application and Award Process

Preapplication Coordination

An applicant should consult the QPE as the single point of contact for more information on the process. The sponsor will have a preapplication meeting with the QPE. This program is excluded from coverage under E.O. 12372.

Application Procedure

An applicant submits a formal application directly to the QPE.

Award Procedure

QPEs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects.

Deadlines

Deadlines are established on a case-by-case basis by the QPE.

 

Range of Approval/Disapproval Time

Appeals

If a Risk Sharing Request is refused, HUD will state the reasons for the refusal.

Renewals

HUD will provide reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by QPEs.

 

Assistance Considerations

Formula and Matching Requirements

The program is a pilot designed to assess the feasibility of risk-sharing partnerships between HUD and qualified participating entities.

Length and Time Phasing of Assistance

Legislation has been enacted to make this program permanent.

 

Post Assistance Requirements

Reports

QPEs must submit a semi-annual report listing (1) the original mortgage amount and outstanding unpaid principal balance for each reinsured loan, and (2) the status of the reinsured loan.

Audits

The Department of Housing and Urban Development reserves the right to audit the Mortgage Loans which HUD has reinsured.

Records

QPEs are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions.

 

Program Accomplishments

In fiscal year 2002, HUD insured 2 projects with 256 units totaling $7.7 million.

 

Financial Information

Account Identification

86-4077-0-3-371.

Obligations

(Insured Loans) FY 02 $0; FY 03 est $37,500,000; and FY 04 est $57,000,000.

Range and Average of Financial Assistance

Loan sizes range from $889,000 to $8,000,000 with an average of some $7.3 million. Project sizes range from 48 to 397 units with an average of 191 units.

 

Regulations, Guidelines and Literature

The Section 542(b) program was implemented without regulations.

 

Related Programs

14.188, Housing Finance Agencies (HFA) Risk Sharing.

 

Information Contacts

Regional or Local Office

Persons are encouraged to communicate with the nearest local HUD Multifamily Hub or Program Center listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or the nearest HUD Field Office listed in the Catalog Address Appendix IV.

Headquarters Office

Office of Multifamily Development, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410. Telephone: (202) 708-1142. Use the same number for FTS.

Web Site Address

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

 

Examples of Funded Projects

Not applicable.

 

Criteria for Selecting Proposals

Not applicable.