Housing Finance Agencies (HFA) Risk Sharing
Program Funding
Annual program obligations reported to SAM.gov.
Program Objective
Under Section 542(c), HUD provides credit enhancement for mortgages for multifamily housing projects whose loans are underwritten, processed, serviced, and disposed of by Housing Finance Agencies (HFA). HUD and the qualified State and local HFAs share in the risk of the mortgage.
Eligibility
Eligible Applicants
- For-Profit Organization
Eligible mortgagors, who include investors, builders, developers, public entities, and private nonprofit corporations or associations, may apply to a qualified HFA.
Beneficiaries
- U.S. State Government
Individuals, families, and property owners may be eligible for affordable housing.
How to Apply
Award Procedure
The HFAs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects. However, HUD retains authority for environmental review. The HUD-approved HFA is responsible for making the award once the project qualifies for mortgage insurance.
Processing time depends upon the degree of preparation by the sponsor.
Program details & compliance
Description
Section 542(c) provides credit enhancement for mortgages of multifamily housing projects whose loans are underwritten, processed, serviced, and disposed of by HFAs. HUD and HFAs share in the risk of the mortgage.
Mission Categories
Primary: Property and Mortgage Insurance
Use of Funds
Allowed Uses
Participating qualified State and local Housing Finance Agencies (HFAs) may underwrite, originate, service, and dispose of properties financed under Section 542(c). Program provides full HUD mortgage insurance to enhance HFA bonds to investment grade. HFA reimburses HUD in the event of a claim pursuant to terms of Risk Sharing Agreement. HFAs may elect to share risk with HUD from 10 to 90 percent of the loss. The program provides new independent insurance authority not under the National Housing Act.
Required Documentation
Documentation regarding the characteristics of the property and the qualifications of the mortgagor are submitted with the application to a qualified HFA. Proof of nonprofit status is required of nonprofit organizations. Projects must qualify as affordable housing as defined by Section 42(g) of the Internal Revenue Code of 1986.
Reporting & Compliance
Applicable 2 CFR 200 Subparts
- Subpart F — Audit Requirements
Formula
The basic program instructions are in HUD Handbook 4590.01 - Housing Finance Agency Risk Sharing Pilot Program, available on HUDCLIPS located at www.hudclips.org.