Members of Berkadia FHA/HUD recently attended the 2024 Western Mortgage Advisory Council HUD Lender’s Conference in Denver, Colorado. The conference provided an excellent opportunity to gain insights from industry thought leaders on key topics relevant to HUD lenders and borrowers.
Updates from U.S. Department of Housing and Urban Development
Some general updates from HUD were covered, noting that in 2024 HUD issued just shy of $8 billion in firm commitments, with approximately 20 percent of these in the West Region. At the time of the conference, the West Region had 11 MAP applications currently in processing, of which 67 percent were affordable projects.
There have been virtually no defaults in HUD’s portfolio this year, and the organization remains profitable. Risk mitigation and underwriting parameters are a priority for HUD. Specifically, the lowering of DSCR requirements, with timing yet to be determined but expected to be expedited.
HUD has also dedicated their attention to initiatives aimed at improving processing efficiency. There is a focus on ensuring consistency in application intake and screening, revising regulations for loan disbursements, and introducing new underwriting training with a single-underwriter model.
Heavy 223(f)
The conference took a deep dive into HUD’s Heavy 223(f) program, highlighting advantages of the program and outlining repair levels for refinance.
Advantages of the Heavy 223(f)
- Improved processing speed over (d)(4)
- Works great with 4%LIHTC
- Lesser construction administration requirements
- More favorable interest rates
- Largely, no Davis-Bacon wages
Repair Levels for Refinance
- Heavy (f) deals can include all repair types
- Routine maintenance, level 1, 2, and 3 repairs
- Determine the cost range for repairs per unit
- $15,000>Heavy (f)>$53,093 project would become a 221(d)(4)
- Architect/GC is typically required if:
- Level 2 or 3 reconfiguration of space
- Greater than 3 trade contractors have significant involvement
– Senior Managing Director Kevin Kozminske
For more information on market insights, conference takeaways and HUD programs, please contact your local Berkadia FHA/HUD expert.