The Department of Housing and Urban Development has dropped plans to increase mortgage insurance premiums on loans to for-profit developers who build or renovate multifamily rental and cooperative housing for moderate-income families, the elderly and handicapped residents.
HUD gave notice in November that it would raise premiums on the Federal Housing Section 221(d) (4) and other program by up to 16 basis points, but delayed implementing the plan the face of industry opposition.
The National Association of Home Builders welcomed HUD’s decision to cancel the planned increase in Federal Housing Administration (FHA) multifamily mortgage insurance programs, saying they would have had “a very significant negative impact.”
Given difficulties in mortgage markets, “FHA programs are more important than ever for builders trying to provide affordable rental housing” NAHB President Brian Catalde said in a statement.
FHA’s Section 221(d) (4) program insures lenders who finance the construction or rehabilitation of rental or cooperative housing projects of five or more units. Mortgages up to 90 percent of a project’s replacement value are eligible for long-term financing of up to 40 years, with those loans eligible to be bundled into Government National Mortgage Association (“Ginnie Mae”) mortgage-backed securities.
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