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Catalog of Federal Domestic Assistance

Program Descriptions

CATALOG OF FEDERAL DOMESTIC ASSISTANCE

14.138:  Mortgage Insurance: Rental Housing for the Elderly

Popular Name:  231

Objectives:  To provide good quality rental housing for the elderly.

PROGRAM AND AWARD FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS INFORMATION CONTACTS
RELATED PROGRAMS ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS POST ASSISTANCE REQUIREMENTS


14.138 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:  Eligible mortgagors include private profit-motivated developers, public bodies, and nonprofit sponsors.

Beneficiary Eligibility:  All elderly or handicapped persons are eligible to occupy apartments in a project whose mortgage is insured under the program.

Credentials/Documentation:  Documentation regarding the characteristics of the property and the qualifications of the mortgagor must be submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

14.138 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  The sponsor will have an initial conference with the local HUD field office which does multifamily processing to determine the preliminary feasibility of the project before a site appraisal and market analysis (SAMA) application (for new construction projects) or feasibility application (for substantial rehabilitation projects) is submitted. An environmental assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review. This program is excluded from coverage under OMB Circular No. A-102.

Application Procedure:  The sponsor submits a formal application through a HUD-approved mortgagee to the local HUD office. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:  If the project meets program requirements, the local HUD Field Office issues a commitment to the lender to insure the mortgage.

Deadlines:  Deadlines are established on a case-by-case basis by the local HUD Field Office.

Range of Approval/Disapproval Time:  Processing time, depending upon the degree of preparation by the sponsor, will range from 3 to 6 months.

Appeals:  If an application for mortgage insurance is refused, HUD will state the reasons for the refusal. If reapplication is desired, the applicant may modify the application and reapply.

Renewals:  The term of a commitment to insure may be extended when more time is required.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  For nonprofit and public mortgagors, the maximum amount of the loan is equal to 100 percent of the estimated replacement cost. For all other mortgagors, the maximum amount of the loan is up to 90 percent of the replacement cost (90 percent of project value for projects involving rehabilitation).

14.138 RELATED PROGRAMS:

  • 14.134 Mortgage Insurance: Rental Housing;
  • 14.135 Mortgage Insurance: Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate.

14.138 PROGRAM ACCOMPLISHMENTS:

No loans were insured in fiscal year 1999, and none are anticipated in fiscal year 2000, since Sections 221(d)(3) and 221(d)(4) are more advantageous to the borrower and lender.

14.138 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Type of Assistance:  Guaranteed/Insured Loans.

Obligations:  (Mortgages insured) FY 99 est $0; FY 00 est $0; and FY 01 est $0.

Budget Account Number:  86-4077-0-3-371.

Authorization:  National Housing Act, as amended, Section 231, Public Law 86-372, 73 U.S.C. 654, 12 U.S.C. 1715(V).

Regulations, Guidelines, and Literature:  Fact Sheet, Section 231 for the Elderly; 24 CFR 231.1 et seq. Section 231, Housing for the Elderly for Project Mortgage Insurance, HUD Handbook 4570.1, no charge.

14.138 INFO CONTACTS:

Regional or Local Office:  Persons are encouraged to communicate with the nearest local HUD Field Office listed in the Catalog Address Appendix IV.

Headquarters Office:  Office of Business Products, Department of Housing and Urban Development, Washington, DC 20410. Phone: (202) 708-2866. Use the same number for FTS.

(See Appendix IV for more contact info.)

14.138 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  For nonprofit and public mortgagors, the maximum amount of the loan is equal to 100 percent of the estimated replacement cost. For all other mortgagors, the maximum amount of the loan is up to 90 percent of the replacement cost (90 percent of project value for projects involving rehabilitation). The annual mortgage insurance premium is one-half percent of the mortgage amount. The HUD application processing and commitment fees are $3 per 1,000 of the mortgage amount. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount.

Length and Time Phasing of Assistance:  The maximum mortgage term is 40 years or not in excess of three-fourths of the remaining economic life, whichever is less.

Uses and Use Restrictions:  HUD insures lenders against loss on mortgages. However, few projects have been insured under Section 231 in the last several years. Sections 221(d)(3) and (d)(4) are used instead (see 14.135). Insured mortgages may be used to finance construction or rehabilitation of detached, semidetached, walk-up, or elevator type rental housing designed for occupancy by elderly or handicapped individuals and consisting of 5 or more units. The program has statutory per unit mortgage limits which vary according to the size of the unit, the type of structure, and the location of the project. There are also loan-to-replacement cost and debt service limitations.

14.138 POST ASSISTANCE REQUIREMENTS:

Reports:  Any change of the mortgagor during the period of mortgage insurance must be approved by HUD. Defaults in meeting the mortgage terms must be reported. All mortgagors are required to submit an annual financial statement to HUD. All approved mortgagees at any time upon request by HUD must furnish copies of their latest financial statements.

Audits:  The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgagee or mortgagor in order to determine their compliance and conformance with HUD regulations and standards.

Records:  Mortgagees are required to service and maintain records in accordance with acceptable mortgage practice of prudent lending institutions and the HUD regulations.

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Last Updated, November, 2000             Comments or Questions?           ©Grant Community.com 2000, All Rights Reserved