HUD announced the expansion a Federal Housing Administration (FHA) pilot program that streamlines FHA mortgage insurance applications for affordable housing developments that have equity from the sale of LIHTC Program.
In 2012, FHA launched the pilot that streamlined the review process of LIHTC properties financed with FHA’s Section 223(f) Program. In turn, FHA more than doubled production of new mortgages with LIHTC from 60 per year to 150 per year.
FHA is now extending the pilot program from LIHTC properties financed with Section 223(f) to also include Section 221(d)(4) and Section 220 loan products. Section 223(f) is used for acquisition or refinance of existing multifamily properties, Section 221(d)(4) is used for new construction or substantial rehabilitation (more than $42,000 per unit) and Section 220 is used for properties in urban renewal areas, code enforcement areas and other areas where local governments have undertaken designated revitalization activities.
FHA’s expanded pilot program will ensure faster and more efficient processing for low-risk, LIHTC transactions by eliminating redundant reviews. Average processing time for LIHTC deals is currently 90 days. Under FHA’s pilot, processing times are reduced to 30 days under the Expedited Approval Process track and 60 days under the Standard Approval Process track. A shorter application review period allows borrowers to lock in better interest rates sooner, an important capability in a rising interest rate environment. For more information, read FHA’s notice H 2019-03.