"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."
HUD Multifamily Mortgage Insurance Expands Beyond Its Historical Role
Much of HUD’s recent success with multifamily mortgage insurance can be attributed to their Multifamily for Tomorrow initiatives, which have created standard application templates and underwriting parameters, and streamlined review, loan processing and closing protocols.
Moreover, low default rates and even lower claim rates give the multifamily programs political – and bipartisan – support in Congress.
As a result, HUD multifamily mortgage insurance is no longer considered the financing of last resort – its mission has expanded beyond being a source of affordable capital when other sources are not in the market or are prohibitively expensive.
This transition exploded in 2021 when compared to the previous year. Consider the following data points:
And, despite the recent uptick in interest rates, which will affect all capital sources to some degree, HUD-insured multifamily loans remain a highly attractive source of capital, featuring fixed interest rates, 35-to-40-year amortizations, non-recourse provisions and cash-out options. Moreover, loan underwriting parameters are generous when compared to other sources: construction loans at 85% loan-to-cost and cash-out refinancing loans at 80% loan-to-value, both with 1.17 debt service coverage ratios.
We applaud HUD’s transition from stopgap financing to everyday alternative and look forward to the continued growth and success of its multifamily mortgage insurance programs.
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