HUD Releases Proposed FHA Multifamily Underwriting Changes
During IBS, Deputy Assistant Secretary (DAS) Carol Galante met with a number of housing industry groups, including NAHB, to discuss proposed changes to the underwriting process and a strategy to strengthen FHA multifamily programs. The proposed changes have now been released by HUD. NAHB is working with its members to prepare comments and is planning to schedule a follow-up meeting with the DAS to discuss our concerns.
HUD is proposing these changes in response to escalating default rates in their multifamily portfolio. During a recent industry conference, Galante pointed out that market-rate Section 221(d)(4) loans are showing the greatest signs of performance deterioration. FHA has a concentration of market-rate properties in the highest vacancy markets, and claims default rates for apartments have increased from .6% in FY2007 to 1.2% in FY2009. In response to increasing defaults and claims, HUD will focus on the following three areas:
1) Improved counterparty oversight (of both MAP lenders and borrowers)
2) Improved credit risk management
3) Improved processing.
More details are included here.
View NAHB’s previous report in the Jan. 29 issue of Hotline.
NAHB will continue to update the membership on this issue.
For more information e-mail Claudia Kedda or call her at 800-368-5242, ext. 8352.
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