HUD is proposing significant changes to its multifamily mortgage insurance programs because it is concerned about rising defaults in the FHA multifamily loan portfolio. HUD says market-rate loans are showing the greatest signs of distress and points out that it has a concentration of market rate properties in high vacancy markets. Although no programs will be shut down per se, taken together, the changes would cause many borrowers to not move forward and either return their properties to the current lender or not start construction.
Our organizations believe that many of HUD’s insurance claims are due to recent global economic stress and not program underwriting procedures.
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