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FHA Low Income Housing Tax Credit Pilot Program

FHA Low Income Housing Tax Credit Pilot Program. SMAC Conference May 30, 2013. Program Objectives & Outcome. Increase FHA’s Affordable Housing Production Implement HERA’s Pilot Program Mandate Through Accelerated Processing Compatible with Tax Credit Program Requirements

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FHA Low Income Housing Tax Credit Pilot Program

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  1. FHA Low Income Housing Tax Credit Pilot Program SMAC Conference May 30, 2013

  2. Program Objectives & Outcome • 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

  3. Eligible Projects • 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

  4. Eligible Projects (continued) • 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

  5. Process Changes: How We Make it Work • 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)

  6. Process Changes: How We Make it Work (continued) • 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

  7. Process Changes: How We Make it Work (continued) • 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

  8. 3 Transaction Types: Assisted Housing • 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

  9. Transaction Types: Recent Construction or Rehab • 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

  10. Transaction Types: Resyndication • 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)

  11. Progress and Next Steps • 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

  12. Contact Information 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) 402-5210 Lynn.Wehrli@HUD.gov

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