Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate

Section 221(d)(4) insures mortgage loans to facilitate the new construction or substantial rehabilitation of multifamily rental or cooperative housing for moderate-income families, elderly, and the handicapped. Single Room Occupancy (SRO) projects ma

Section 221(d)(4) insures lenders against loss on mortgage defaults. Section 221(d)(4) assists private industry in the construction or rehabilitation of rental and cooperative housing for moderate-income and displaced families by making capital more readily available. The program allows for long-term mortgages (up to 40 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage Backed Securities.

Public, profit-motivated sponsors, limited distribution, nonprofit cooperative, builder-seller, investor-sponsor, and general mortgagors.

All families are eligible to occupy dwellings in a structure whose mortgage is insured under the program, subject to normal tenant selection. There are no income limits. Projects may be designed specifically for the elderly and handicapped.

Section 221(d)(4) insures lenders against loss on mortgage defaults for market rate rental projects. Insured mortgages may be used to finance construction or rehabilitation of detached, semidetached, row, walkup, or elevator-type rental or cooperative housing containing 5 or more units. The program has statutory 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. Contractors for new construction and substantial rehabilitation projects must comply with prevailing wage requirements under the Davis-Bacon Act.

See MAP Guide

The maximum mortgage term is 40 years, or not in excess of three-fourths of the remaining economic life, whichever is less.

A short conference with a HUD representative and a preapplication are generally required. See the MAP Guide for additional information.

The local HUD Multifamily Hub or Satellite Office reviews the application to determine whether the proposal is feasible. Considerations include market need, zoning, architectural merits, capabilities of sponsors, availability of community resources, etc. If the project meets program requirements, the HUD Multifamily Hub or Satellite Office issues the lender a commitment to insure the project mortgage.

See MAP Guide

Processing time depends upon the degree of preparation by the sponsor and whether or not TAP or MAP is used. Processing time goals are to complete a review of a final "Firm Commitment Application" within 90 days of HUD processing, which 90 days would exclude time during which a borrower is responding to certain HUD requests, for example, for clarifying data or needed documents.

The term of a commitment to insure may be extended under certain circumstances when more time is required.

If an application for mortgage insurance is refused, HUD will state the reasons for the refusal. Decision appeals may be made in accordance with the MAP Guide.