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A Potpourri of HUD Program Ponderings 

Here are several of our observations on recent HUD matters that we’d like to share:

  • The Federal fiscal year ended September 30; soon we expect HUD to officially release its data on multifamily and healthcare mortgage insurance production.  Spoiler alert – volume is expected to be considerably lower than previous years.  We’ll have more details later, but among the likely external causes for the decline in HUD’s production are higher interest rates and increased construction costs.  Internal causes?  We have our thoughts but will keep them to ourselves!
  • HUD’s volume may be down, but the mortgage insurance programs are certainly not out!  One of HUD’s missions is to provide access to affordable capital when, like now, traditional capital sources like banks, Agency lenders and commercial lenders have become prohibitively expensive or have curtailed their activities.  Should these trends continue, expect HUD-insured financing to make a huge comeback.  
  • Notwithstanding lower multifamily production volumes, affordable housing owners looking for funds to improve their projects have an alternative way to access capital.  In June we wrote about HUD’s Green and Resilient Retrofit Program (GRRP) that will provide up to $837 million in grants and $4 billion in loans to facilitate utility-saving and climate hazard-mitigating investments.  According to a HUD press release dated October 19, HUD already has awarded over $121 million over the first two funding waves.  There is still time to participate.  
  • HUD financing for new construction offers high leverage, 40-year amortizations/ terms and are non-recourse.  There are, ahem, a few requirements to the programs, and one of the major ones is the payment of prevailing wages by the general contractor.  On August 23, 2023, the Department of Labor (DOL) published the final rule that updates prevailing wage regulations issued under the Davis-Bacon and Related Acts.  This is the first comprehensive regulatory review in nearly 40 years.  HUD and the DOL contend that revisions to these regulations will promote compliance, provide appropriate and updated guidance, and enhance their usefulness in the modern economy.  Stay tuned – we’ll be taking a closer look at these new requirements in the future.  

Please contact us if you would like additional information. 

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"Sims Mortgage Funding has been a trusted partner of Parkview Community Hospital since 2011, when they helped us refinance our short-term, high interest rate debt with a HUD-insured loan. They have a strong knowledge of HUD's programs and procedures, and were able to skillfully lead the hospital, architect and construction manager through a complicated financing process and to a successful closing."
Stephen PopkinCEO, Parkview Community Hospital Medical Center
"We really appreciate all the hard work Sims provided our organization. They helped us navigate through a complicated HUD financing process that resulted in considerable financial benefit to the project and to our elderly residents"
Steve GouldProperty Manager, Community Realty Manangement