FHA LOW INCOME HOUSING TAX CREDIT

PILOT PROGRAM

SMAC ConferenceMay 30, 2013

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• Increase FHA’s Affordable Housing Production

• Implement HERA’s Pilot Program Mandate Through Accelerated Processing Compatible with Tax Credit Program Requirements

• Outcome: Complete FHA Loan Processing in 120 Days, from Application to Closing

PROGRAM OBJECTIVES & OUTCOME

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• All Have Tax Credit or Bond Cap Allocations (Either 4% or 9% Credits Accepted)

• Projects in All States are Now Eligible

• All Are Comparatively Low Risk Projects, Meeting Sustaining Occupancy Requirements

• Tenants remain in place except for temporary (30 day) relocation

ELIGIBLE PROJECTS

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• All Are Eligible for 223(f) Loan Program, With Certain Adaptations for The Pilot Program:

• Rehab Expenditures of up to $40,000/unit (unadjusted for locality) will be allowed

• For Mod Rehabs, 221(d)(4) Substantial Rehab Controls have been Adopted

• Standard 223(f) 12 month repair period can be Extended

Note: Davis Bacon Wage Rates do not Apply

ELIGIBLE PROJECTS (CONTINUED)

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• Use MAP Lenders With Tax Credit Experience

• Use Senior Staff Only (supervisors) as Designated Underwriters at Each of the Pilot Hubs

• Revise Process – Not Linear with Multiple Experts, but all Review done by Designated Underwriter

• Limit Underwriting To Only one FHA Program Adapted for Use with Tax Credits: 223(f)

PROCESS CHANGES: HOW WE MAKE IT WORK

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• Hold Optional Concept Meeting (Lender/Owner and Designated Underwriter) Prior to Application, to Confirm Project’s Pilot Suitability or Refer it to Another MAP Program

• Designate HQ Asset Management Point of Contact For:• First Mortgage Prepayments • Special Approvals and Waivers (e.g. Flex Sub)

• Facilitate Section 8 Processing• HAP Contract Renewals• Section 8 Rent Increases

PROCESS CHANGES: HOW WE MAKE IT WORK (CONTINUED)

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• Defer Submission of Plans and Specs Until Just Prior to Closing

• Require Fewer Application Exhibits and Requirements (See Pilot’s Modified Exhibits Checklist)

• Use One-Stage, ‘Direct-to-Firm’ Commitment Applications – No Preliminary Application Needed

• Provide HQ Staff in MF Production to Track and Monitor Pilot Projects and Provide Ongoing Guidance

PROCESS CHANGES: HOW WE MAKE IT WORK (CONTINUED)

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• Acquisition and/or Refinancing with Moderate Rehabilitation for Developments with Project based Rental Assistance Covering at Least 90% of Units

• Owner must ask Asset Management for any desired rent increase prior to the submission of the application for processing under the Pilot

• Owner must agree to enter into a new 20 year HAP Contract

3 TRANSACTION TYPES: ASSISTED HOUSING

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• Permanent Financing of Stabilized but Newly Built or Substantially Rehabilitated Projects

• Projects Require a Waiver of the 3 Year Rule (Property must meet requirements of ML 2011-13, except owners will not have to show evidence that they have not been able to obtain alternative financing)

• Projects must meet sustaining occupancy/reserve requirements of 3 Year Rule Waiver Notice

• Equity Installments must Remain Outstanding up until time of FHA Loan Closing

TRANSACTION TYPES: RECENT CONSTRUCTION OR REHAB

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• Permanent Financing And Moderate Rehabilitation of Stabilized Tax Credit Projects Being Resyndicated with New Tax Credits

• Projects must have achieved stabilized occupancy (at least 85% or greater occupancy for previous 12 months)

TRANSACTION TYPES: RESYNDICATION

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• In September 2012, 5 new Pilot Hubs added to Original 4 Pilot Hubs, Now including Atlanta, Boston, Chicago, Denver, Detroit, Fort Worth, LA, San Francisco and Seattle

• Geographic Expansion also allowed Projects from All States to be Included. Projects not Located in Pilot Hub Jurisdictions are Assigned to and Processed in the Pilot Hubs

• 12 new MAP Pilot Lenders Selected November 2012, bringing total to 32

• Third Lender Selection Round Underway

PROGRESS AND NEXT STEPS

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Project Documentation posted in MAP page at:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/map/maphome/taxcredit

Questions? Please contact:

Lynn Wehrli(202) 402-5210Lynn.Wehrli@HUD.gov

CONTACT INFORMATION

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