Mortgage Insurance-Two Year Operating Loss Loans, Section 223(d)
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.
General information about this opportunity
Last Known Status
Deleted 09/09/2014 (Archived.)
Agency: Department of Housing and Urban Development
Office: Office of Housing-Federal Housing Commissioner
Type(s) of Assistance Offered
National Housing Act, as amended, Public Law 90- 448, as amended, Public Law 91-152, 12 U.S.C. 1715x.
Who is eligible to apply/benefit from this assistance?
Owners of a multifamily project or facility subject to a mortgage insured by HUD are eligible to apply.
Individuals/families and property owner.
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.
What is the process for applying and being award this assistance?
Preapplication coordination is required. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.
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.
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.
Contact the headquarters or regional office, as appropriate, for application deadlines.
Approval/Disapproval Decision Time
Processing time will be dependent upon the degree of preparation by the sponsor and HUD Multifamily Hub or Program Center workload.
If an application for operating loss loan is refused, HUD will state the reason for the refusal.
How are proposals selected?
How may assistance be used?
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.
What are the requirements after being awarded this opportunity?
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. HUD reserves the right to audit the accounts of the mortgagee or mortgagor to determine compliance and conformance with HUD regulations and standards.
Mortgagees are required to service and maintain records in accordance with acceptable practices of prudent lending institutions and the HUD regulations.
Other 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. See the following for information on how assistance is awarded/released: over the life of the mortgage.
Who do I contact about this opportunity?
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.
Carmelita James 451 Seventh Street SW, washington, District of Columbia 20410 Email: email@example.com
Phone: (202) 402-2579
(Guaranteed/Insured Loans) FY 11 $2,342,100; FY 12 est $2,000,000; and FY 13 est $0
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.
Examples of Funded Projects