The changes, effective immediately, were the result of a collaboration of the mortgage industry and HUD, says Pharis, who chaired the Mortgage Bankers Association task force that worked with HUD. "To HUD's credit, they saw they had a very low market share in an industry--the tax credit industry--that they really should be a very heavy player in. They needed to do something to increase their market share and become a more viable financing option. The industry is very pleased with how far HUD has gone. We think it shows very good effort on their part."

While there are certainly additional issues that were not addressed by the new policy, Pharis maintains that these changes alone show that the agency is willing to work better with the industry. "This is such a huge step for them, so we first need to see how this works and then tweak it, as needed, going forward," she relates. "There is every indication that HUD is going to do right by the program and move this in the right direction."

The response from industry players, meanwhile, has been overwhelmingly positive. Pharis says that her clients are "extremely excited" about the changes, for various reasons. For one, developers with projects already in the works will benefit from the deferred equity investment. New developments will benefit from the shorter timeframes resulting from the earlier commitment. "Equity prices have declined dramatically over the past six to eight months as the credit markets have deteriorated, so they're trying to do everything they can to try to make the deals work better. This will help," she explains.

As for those developers who are in the planning process for projects, the fact that they don't have to have concrete specs in place is leading them to reconsider FHA as a financing option. "It's actually getting some interest from some of our borrowers who have traditionally not been favorably inclined toward the HUD programs due to the timeframe and lack of certainty," says Pharis.

Given the problems in the credit markets, HUD's alleviating the challenges to its programs and willingness to become more aggressive in the marketplace will almost certainly increase the number of projects that are funded through the program. "With all of the credit markets in flux, we need one player who is going to remain stable," says the executive. "That has traditionally been HUD, but until now it hasn't been able to make its programs marry well with the tax credit program. I think there will be a lot of borrowers playing in the HUD arena that weren't willing to do so before."