Mortgage bankers could see benefits from a HUD interim rule that initiates a multifamily mortgage risk-sharing program between itself and federal housing agencies.
The Housing Community Development Act passed last year authorized HUD to do two types of risk shar with the federal housing finance agencies and another with Fannie Mae and Freddie Mac. HUD has recei proposals from both government-sponsored enterprises, which they call "reinsurance," but the housing agency program didn't take off until it was printed in the Federal Register Dec. 3. The department i applications from state and local housing finance agencies through Feb. 1.
"In a typical deal, the housing finance agency will take 50% of the risk while HUD takes the other Cheryl Malloy, a regulatory counsel with the Mortgage Bankers Association specializing in multifamil "Each agency will use its own underwriting standards and will issue commitments on the loan that wil insured." Housing agencies recycle their funds by issuing special-purpose bonds based on the FHA-bac mortgages they purchase.
The deals, Malloy said, are attractive to the finance agencies because they get the credit enhance HUD without FHA having to underwrite the loan. FHA is dealing with a backlog in its mortgage insuran program because of understanding, a problem that would be side stepped through this program. Mortgage bankers like the program because of the extra business it could provide. The low-income hou tax credit--which would directly effect most of the multifamily mortgages the program is geared towa option that will attract lenders, but having another secondary market source to sell these loans to as well.
The down side is that the program is limited in scope. Only 10 to 15 states would be interested or of handling such a program, including states like Massachusetts, Michigan, Maryland and Rhode Island Congress capped the number of units that could be eligible under the program to 30,000 multifamily u through 1995.
