Housing Finance Agencies (HFA) Risk Sharing

 

Under Section 542(c), HUD provides credit enhancement for mortgages for multifamily housing projects whose loans are underwritten, processed, serviced, and disposed of by Housing Finance Agencies (HFA). HUD and the Housing Finance Agencies share in the risk of the mortgage. The program was originally designed as a pilot program to assess the feasibility of risk-sharing partnerships between HUD and qualified State and local HFAs in providing affordable housing for the Nation. The Section 542(c)program is now permanent multifamily insurance program.

General information about this opportunity
Last Known Status
Active
Program Number
14.188
Federal Agency/Office
Agency: Department of Housing and Urban Development
Office: Office of Housing-Federal Housing Commissioner
Type(s) of Assistance Offered
GUARANTEED/INSURED LOANS
Program Accomplishments
Not Applicable.
Authorization
Housing and Community Development Act of 1992, Section 542(c), Public Law 102-550, 12 U.S.C. 1707. 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 mortgage insurance program., Title 24, Part 266.
Who is eligible to apply/benefit from this assistance?
Applicant Eligibility
Eligible mortgagors, who include investors, builders, developers, public entities, and private nonprofit corporations or associations, may apply to a qualified HFA. To be eligible for HUD's approval, the HFA must: (1) carry the designation of "top tier" or its equivalent as evaluated by Standard and Poors or another nationally recognized rating agency; (2) receive an overall rating of "A" for the HFA for its general obligation bonds from a nationally recognized rating agency; and (3) otherwise demonstrate its capacity as a sound, well-managed agency that is experienced in financing multifamily housing.
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 with the application to a qualified HFA. Proof of nonprofit status is required of nonprofit organizations. Projects must qualify as affordable housing as defined by Section 42(g) of the Internal Revenue Code of 1986. This program is excluded from coverage under OMB Circular No. A-87.
What is the process for applying and being award this assistance?
Pre-Application Procedure
Preapplication coordination is required. An environmental impact assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.
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. An applicant submits a formal application directly to a HUD-approved HFA.
Award Procedure
The HFAs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects. However, HUD retains authority for environmental review. The HUD-approved HFA is responsible for making the award once the project qualifies for mortgage insurance.
Deadlines
Not Applicable.
Approval/Disapproval Decision Time
Processing time depends upon the degree of preparation by the sponsor.
Appeals
If an application for mortgage insurance is refused, HFA will state the reasons for the refusal. If reapplication is desired, the applicant may modify the application and reapply.
Renewals
HUD will provide mortgage insurance on multifamily housing projects whose loans were underwritten, processed, serviced, and disposed of by HFAs.
How are proposals selected?
Not Applicable.
How may assistance be used?
Participating qualified State and local Housing Finance Agencies (HFAs) may underwrite, originate, service, and dispose of properties financed under Section 542(c). Program provides full HUD mortgage insurance to enhance HFA bonds to investment grade. HFA reimburses HUD in the event of a claim pursuant to terms of Risk Sharing Agreement. HFAs may elect to share risk with HUD from 10 to 90 percent of the loss. The program provides new independent insurance authority not under the National Housing Act.
What are the requirements after being awarded this opportunity?
Reporting
No reports are required.
Auditing
In accordance with the provisions of OMB Circular No. A-133 (Revised, June 27, 2003), "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $500,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in Circular No. A-133. The Department of Housing and Urban Development reserves the right to audit the accounts of the HFA and the mortgagor in order to determine their compliance and conformance with HUD regulations and standards.
Records
HFAs are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the implementing regulations. HFAs must also monitor construction/inspection process.
Other Assistance Considerations
Formula and Matching Requirements
Statutory Formula: Title 24 , Part 266.
This program has no matching requirements.
This program does not have MOE requirements.
Length and Time Phasing of Assistance
No. See the following for information on how assistance is awarded/released: Over the life of the insured mortgage.
Who do I contact about this opportunity?
Regional or Local Office
See Regional Agency Offices. Persons are encouraged to communicate with the nearest local HUD Multifamily Hubs and Program Centers listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or the nearest HUD Field Office listed in the Appendix IV of the Catalog.
Headquarters Office
Carmelita James 451 Seventh Street SW, washington, District of Columbia 20410 Email: carmelita_a._james@hud.gov Phone: (202) 402-2579
Website Address
http://www.hud.gov/offices/hsg/mfh/progdesc/progdesc.cfm.
Financial Information
Account Identification
86-4077-0-3-371.
Obligations
(Guaranteed/Insured Loans) FY 11 $106,978,722; FY 12 est $233,000,000; and FY 13 est $233,000,000
Range and Average of Financial Assistance
No Data Available.
Regulations, Guidelines and Literature
The regulatory authority for this program is regulation 24 CFR Part 266. HUD Handbook 4590.1, Housing Finance Agency Risk-Sharing Pilot Program, is located on www.hudclips.org.
Examples of Funded Projects
Not Applicable.

 



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