HUD issued the final rules cutting the Federal Housing Administration (FHA) multifamily mortgage insurance rates on March 31 to spur the financing of affordable housing and energy-efficient apartments. The decision is anticipated to result in the rehabilitation of an additional 12,000 units of affordable housing each year. FHAs multifamily programs account for 9.2 percent of the total multifamily mortgage market.
NAA/NMHC submitted comments to the proposed rules applauding the decision and also offered comments clarifying and adjusting certain aspects related to inclusionary zoning, fee caps and energy-efficiency. HUD adopted a number of our comments directly or they were incorporated along with similar comments from other submitted letters.
For example, several comments were accepted in the area of energy-efficiency, including the extension of compliance periods, exclusion of small properties from Energy Star compliance and elimination of the green building certification requirement. But qualifying for reduced rates is still a challenge because of the difficulty in getting whole building energy data, as well as energy certifications for older and smaller buildings. The inclusionary zoning compliance period was held at 30 years, rejecting a request to reduce the term. Fee caps for small loans were held at the $2 million loan size, but FHA offered evidence that the impact will be small.
HUD anticipates that lowering multifamily insurance rates will leverage over $400 million in new mortgage financing for affordable housing and energy-efficient development. This is expected to encourage owners to adopt higher standards for construction and rehabilitation. The rate reductions took effect on April 1, 2016.
Provided by NMHC as part of the NAA/NMHC Joint Legislative Program