CREF Policy Update: HUD Responds to MBA Advocacy on Underwriting, Floodplain Rule; CREF Delinquencies Data
HUD Acts on MBA’s Advocacy, Proposes More Flexible Underwriting for Multifamily Loans
Last Monday, following months of advocacy from MBA, the Department of Housing and Urban Development (HUD) published two proposed Mortgagee Letters (MLs) to the drafting table.
The first ML would roll back the underwriting standards and guidelines for Federal Housing Administration (FHA) multifamily loans, including 221(d)(4)s and 223(f)s. The notice will lower the Debt Service Coverage Ratio (DSCR) and the Loan to Value (LTV) and Loan to Cost (LTC) ratios.
The second ML provides new underwriting standards for “middle-income housing” loans using the 221(d)(4) program. Under this notice, the LTC and DSCR would be rolled back for loans that have 50% of units targeted to incomes at 60-120% of the Area Median Income (AMI), and that are secured by a use restriction that is monitored by a state or local government entity on an annual basis.
Why it matters: Lowering the underwriting criteria will increase the number of multifamily properties that are developed.
What’s next: The comment period goes through November 25, 2024. MBA will work with the FHA Multifamily Committee to respond to these proposals.
For more information, please contact Megan Booth at (202) 557-2740.
HUD Responds to Lender Questions on Floodplain Rule
Last Monday, following a request from MBA, HUD published additional guidance and a response to questions regarding its Federal Flood Risk Management Standard (FFRMS) final rule.
HUD this week also held a training webinar on the rule, with a second to come on November 4th. Free registration is available here. The rule is effective on January 1, 2025, for applications that have not yet cleared their environmental review.
Why it matters: The FFRMS rule greatly expands the floodplain criteria and requires elevation for properties that fall within that new definition.
What’s next: MBA will continue to work with HUD and other partners to ensure all the tools and guidance that are needed are available to comply with the rule.
For more information, please contact Megan Booth at (202) 557-2740.
Commercial and Multifamily Mortgage Delinquency Rates Increased in the Third Quarter of 2024
Delinquency rates for mortgages backed by commercial properties increased slightly during the third quarter of 2024. This is according to the MBA’s latest commercial real estate finance (CREF) Loan Performance Survey, released last Tuesday.
MBA’s Head of Commercial Real Estate Research Jamie Woodwell said, “Delinquency rates for commercial mortgages backed by office properties continued to increase during the third quarter but declined for loans backed by lodging, retail and industrial properties. The commercial mortgage market is large and diverse, covering a range of property types, sizes and ages, geographic markets and submarkets, borrower types, vintages and more. Each of those differences is affecting loan performance, some to the good and some to the bad.”
To see the full results, click here.
For more information, please contact Jamie Woodwell at (202) 557-2936.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely commercial/multifamily and single-family programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
- Transition Climate Risks: From Initial Assessment to Mitigation – November 6
- Mastering Commercial/Multifamily Lender-Placed Insurance – November 7
- Manufactured Housing: An Emerging Multifamily Supply Solution – November 13
- Transition Climate Risks: From Initial Assessment to Mitigation – November 20
- Navigating and Ensuring Accurate Reporting with the MBA Commercial and Multifamily Inspection Form – December 5
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2931.
