Finding Financing

3 min read

Affordable housing finance is an ever evolving discipline and, as a result, an evergreen topic for this publication. This month’s issue highlights a number of interesting financing opportunities, tools, niches and programmatic changes that will be of interest to our readers. Keeping with this theme, I’d like to explore and expand on a few topics that are trending in our office following the NCHMA Spring Meeting on March 31 and the PTEE Roadshow in Indianapolis on April 9.

I’d like to start with FHA. As we will explore later in this issue, NH&RA’s affiliate the National Council of Housing Market Analysts (NCHMA) recently hosted an event with senior leadership from FHA and followed-up with written comments on streamlining and improving the market study process, bringing FHA more in line with the LIHTC industry. Processing improvements related to the revised MAP Guide Book will certainly improve this execution over time. What I think will be even more exciting for many of our members is the news that FHA is:

1.) Considering a significant raise of the per-unit loan limits for the 223(f) program; and
2.) Considering steps to make its 241(a) program (which is designed for additions, improvements and / or energy conservation measures on properties that currently have FHA/HUD insured mortgages) more competitive.

The implications of these changes could create substantial new refinance, ac-rehab and energy efficiency opportunities. Do stay tuned!

As I learned in greater detail from Evan Williams of Prudential at last month’s Preservation Through Energy Efficiency Road Show in Indianapolis, FHA is also taking steps to better incorporate energy efficiency measures into underwriting process, both through the MAP Guide and in its proposed electronic physical capital needs assessment (ePCNA) process. The ePCNA will introduce cost benefit analysis for energy efficiency and will including benchmarking and energy audit capability. This will allow FHA to underwrite up to 75% of utility savings (up from 50% in the current MAP Guide, and then only by waiver) into new financings and ultimately allow for greater renovation allowances. Furthermore, the aggregate data gleaned from HUD’s benchmarking efforts will be an invaluable resource for the industry.

For is much that is happening at FHA, I don’t want to give short shrift to other financing platforms. In recent issues we have covered new programs and executions at both Freddie Mac and Fannie Mae. At the state level, there are also new programs being pioneered (Georgia Department of Community Affairs RAD Multi-Site Bond Program is a prime example) and expanded (kudos are in order for the Maryland Affordable Housing Coalition for successfully advocating for $20 million in funding for the Department of Housing and Community Development’s Rental Housing Works Program in a very challenging state budget environment).

With new products to test and low interest rates, it’s an exciting time to lock-in financing for the long term and I hope you find some new nuggets of wisdom in this month’s issue that will help you at the closing table.