Search
 

HUD Tweaks Programs to Improve Process for LIHTC Deals

The move is expected to streamline the process for borrowers and make HUD programs more competitive in the market.

By Sule Aygoren Carranza | Updated on July 25, 2008

WASHINGTON, DC-With a longstanding reputation for being difficult to work with, the Department of Housing and Urban Development has made a number of policy changes aimed at making its FHA program easier to navigate for affordable housing players. The move is an effort to streamline the way the agency processes multifamily mortgage insurance applications involving low-income housing tax credits and make its FHA program more competitive when it comes to financing affordable projects.

The policy, which HUD announced last week, contains four program changes that give hubs and program centers more discretion in processing; cuts costs during the application and transaction processes; and improves the coordination between the department, borrowers and tax credit allocation agencies. There are two major changes that “dramatically improve the way the tax credit program and the mortgage insurance program fit together,” relates Cathy Pharis, a director with Deutsche Bank Berkshire Mortgage in Bethesda, MD.

The first is aimed to make FHA more in line with traditional financing. Until now, HUD required that all of the tax credit equity for a project be funded at closing of the construction loan. Now, only 20% of the equity must be put up at initial endorsement, with the balance to be paid over the development period. This, says Pharis, can increase tax credit pricing because the investors don’t need to put up the money as early in the development process.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.