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Catalog of Federal Domestic Assistance

Program Descriptions

14.188:  Housing Finance Agencies (HFA) Risk Sharing Pilot Program

Popular Name:  542(c) Risk Sharing Program

Objectives:  Under this program, HUD provides credit enhancement for mortgages for multifamily housing projects whose loans are underwritten, processed, serviced, and disposed of by Housing Finance Agencies (HFA). HUD and the Housing Finance Agencies share in the risk of the mortgage. The program is a pilot designed to assess the feasibility of risk-sharing partnerships between HUD and qualified State and local HFAs in providing affordable housing for the Nation.

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

14.188 ELIGIBILITY REQUIREMENTS:

14.188 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  To obtain mortgage insurance an applicant should consult the HFA as the single point of contact for more information on the process. The sponsor will have a pre-application meeting with the HFA. This program is excluded for coverage under E.O. 12372.

Application Procedure:  An applicant submits a formal application directly to a HUD- approved HFA.

Award Procedure:  The HFAs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects. However, HUD retains authority to adjust mortgage amount up to and including final endorsement if warranted by monitoring of these processes. The HUD-approved HFA is responsible for making the award once the project qualifies for mortgage insurance.

Deadlines:  Deadlines are established on a case-by-case basis by HFAs, and are mutually agreed to at the pre-commitment conference.

Range of Approval/Disapproval Time:  Processing time depends upon the degree of preparation by the sponsor.

Appeals:  If an application for mortgage insurance is refused, HFA will state the reasons for the refusal. If reapplication is desired, the applicant may modify the application and reapply.

Renewals:  HUD will provides mortgage insurance on multifamily housing projects whose loans are underwritten, processed, serviced, and disposed of by HFAs. Congress has authorized a total of 57,000 units. Legislation is being proposed to extend the program on a permanent basis.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  Loan sizes range from $290,000 to $71,000,000 with an average loan of some $4.8 million. Project sizes range from 8 to 1,900 units with an average of 116 units.

14.188 RELATED PROGRAMS:

• 14.189 Qualified Participating Entities (QPE) Risk Sharing Pilot Program.

14.188 PROGRAM ACCOMPLISHMENTS:

14.188 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Type of Assistance:  Guaranteed/Insured Loans.

Obligations:  (Loans insured) Reported under program 14.135.

Budget Account Number:  86-4077-0-3-371.

Authorization:  Housing and Community Development Act of 1992, Section 542(c), Public Law 102-550, 12 U.S.C. 1707.

Regulations, Guidelines, and Literature:  The regulatory authority for this pilot program is regulation - 24 CFR Part 266.

14.188 INFO CONTACTS:

Regional or Local Office:  Persons are encouraged to communicate with the nearest local HUD field office listed in the Appendix IV of the Catalog.

Headquarters Office:  Business Products Division, Office of Multifamily Housing, Department of Housing and Urban Development, Washington, DC 20410-8000. Phone: (202) 708-2866. Use the same number for FTS.

(See Appendix IV for more contact info.)

14.188 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  The program is a pilot designed to assess the feasibility of risk-sharing partnerships between HUD and other financial agencies.

Length and Time Phasing of Assistance:  The legislation authorizing this program allows for 57,000 units to be insured through FY 1999.

Uses and Use Restrictions:  Participating qualified State and local Housing Finance Agencies (HFAs) may originate and underwrite affordable housing loans. Program provides full HUD mortgage insurance to enhance HFA bonds to investment grade. HFA reimburses HUD in the event of a claim pursuant to terms of Risk Sharing Agreement. HFAs may elect to share risk with HUD from 10 to 90 percent of the loss. The program provides new independent insurance authority not under the National Housing Act.

14.188 POST ASSISTANCE REQUIREMENTS:

Reports:  Any change of the mortgagor during the period of mortgage insurance must be approved by HFA. Defaults in meeting the mortgage terms must be reported. All mortgagors are required to submit an annual financial statement to HFA.

Audits:  The Department of Housing and Urban Development reserves the right to audit the accounts of the HFA and the mortgagor in order to determine their compliance and conformance with HUD regulations and standards.

Records:  HFAs are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the implementing regulations. HFAs must also monitor construction/inspection process.