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Catalog of Federal Domestic Assistance

Program Descriptions

CATALOG OF FEDERAL DOMESTIC ASSISTANCE

14.189: Qualified Participating Entities (QPE) Risk Sharing Pilot Program

Popular Name: 542(b) Risk Sharing Program

Objectives: Under this program HUD provides reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by qualified participating entities (QPEs) and/or its approved lenders, up to 15,000 units through fiscal year 1994, and 7,500 units in 1996. The program is a pilot designed to assess the feasibility of risk-sharing partnerships between HUD and QPEs, including Government Sponsored Enterprises, financial institutions and the Federal Housing Finance Board, 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

14.189 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility: Eligible mortgagors include investors, builders, developers, public entities, and private nonprofit corporations or associations may apply to a qualified QPE and/or its lender.

Beneficiary Eligibility: Individuals, families, and property owners may be eligible for affordable housing.

Credentials/Documentation: Documentation regarding the characteristics of the property and the qualifications of the mortgagor are submitted to the QPE and/or its lender.

14.189 APPLICATION AND AWARD PROCESS:

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

Application Procedure: An applicant submits a formal application directly to the QPE.

Award Procedure: QPEs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects.

Deadlines: Deadlines are established on a case-by-case basis by the QPE.

Range of Approval/Disapproval Time: Within 15 days of HUD's receipt of a complete and acceptable Risk Sharing Request, HUD will execute the Addendum to Risk Sharing Agreement which signifies that HUD has undertaken a Risk Sharing Obligation for a specific mortgage loan.

Appeals: If a Risk Sharing Request is refused, HUD will state the reasons for the refusal.

Renewals: HUD will provide reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by QPEs, up to 15,000 units through fiscal year 1994, and 7,500 units in 1996 and 25,000 in 1999.

Criteria for Selecting Proposals: Not applicable.

Examples of Funded Projects: Not applicable.

Range and Average of Financial Assistance: Loan sizes range from $889,000 to $8,000,000 with an average of some $7.3 million. Project sizes range from 48 to 397 units with an average of 191 units.

14.189 RELATED PROGRAMS:

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

14.189 PROGRAM ACCOMPLISHMENTS:

Eight projects with a total of 770 units were insured in fiscal year 1999.

14.189 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(b), Public Law 102-550, 12 U.S.C. 1701.

Regulations, Guidelines, and Literature: Pilot program implemented without regulations.

14.189 INFO CONTACTS:

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

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

(See Appendix IV for more contact info.)

14.189 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements: The program is a pilot designed to assess the feasibility of risk-sharing partnerships between HUD and qualified participating entities.

Length and Time Phasing of Assistance: The legislation authorizing this program allows for 15,000 units to be allocated through fiscal year 1994. An additional 7,500 were authorized for fiscal year 1996, and an additional 25,000 units in fiscal year 1999. Legislation is being proposed to extend the program on a permanent basis.

Uses and Use Restrictions: QPEs and/or its approved lenders may originate and underwrite affordable housing loans. Program permits HUD to demonstrate, on a pilot basis, alternative forms of Federal credit enhancement to assist in increasing multifamily housing lending. In the event of a default, the QPE will pay all costs associated with loan disposition and will seek reimbursement from HUD. In most cases, the HUD risk share will be 50 percent. The program provides a new insurance authority independent of the National Housing Act.

14.189 POST ASSISTANCE REQUIREMENTS:

Reports: QPEs must submit a bi-annual report listing (1) the original mortgage amount and outstanding unpaid principal balance for each reinsured loan, and (2) the status of the reinsured loan.

Audits: The Department of Housing and Urban Development reserves the right to audit the Mortgage Loans which HUD has reinsured.

Records: QPEs are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions.