Supplemental Loan Insurance Multifamily Rental Housing

Section 241(a) insures lenders against loss on mortgage defaults on projects already insured by HUD or held by HUD. The program is intended to keep the project competitive, extend its economic life, and to finance the replacement of obsolete equipmen

Section 241(a) insures mortgage loans to finance repairs, additions, and improvements to multifamily rental housing and health care facilities with FHA insured first mortgages or HUD-held mortgages.

Owners of a multifamily project or facility already subject to a mortgage insured by HUD or held by HUD.

Individuals, families, and owners of multifamily projects.

Section 241(a) insures lenders against loss on loans made either (1) to finance additions and improvements of multifamily housing projects, nursing homes, hospitals and group practice facilities already subject to HUD/FHA insured mortgages or mortgages held by HUD, or (2) to finance energy conservation improvements. The proceeds of a loan involving an insured nursing home, hospital or a group practice facility may also be used to purchase equipment to be used in the operation of such nursing home or facility. The maximum insurable loan for an insured project is an amount which, when added to the outstanding balance of the existing insured mortgage, does not exceed the amount insurable under the program pursuant to which the mortgage covering such project or facility is insured. Where the project is covered by a mortgage held by the Secretary the principal amount of the loan shall be in an amount acceptable to the Secretary. Contractors of substantial rehabilitation projects must comply with prevailing wage requirements under the Davis-Bacon Act. Section 241(a) for apartments requires appropriated credit subsidy, which is limited.

A loan for a project with a HUD-insured or HUD-held mortgage must have a maturity acceptable to HUD.

The borrower's or sponsor's lender will have a pre-application conference with the local HUD Multifamily Hub or Satellite Office to determine the feasibility of the proposed improvements before submitting a firm commitment application. The sponsor must then submit a firm commitment application to the local Multifamily Hub or Satellite Office through a HUD-approved lender for processing. If the project meets program requirements, the local Multifamily Hub or Satellite Office issues a commitment to the lender for mortgage insurance.

If the proposed improvements meet program requirements, the local HUD Multifamily Hub and Satellite Office issues a commitment to the lender to insure the mortgage.

See Application Procedures

Processing time goal is 90 days less any time the lender spends responding to follow up questions or documentation requests from HUD.

The term of a commitment to insure may be extended when more time is required to close the loan.

If an application for mortgage insurance is refused, HUD will state the reasons for the refusal. The lender may appeal the decision in accordance with procedures set forth in the MAP Guide.