Section 221(d)(4) insures mortgage loans to facilitate the new construction
or substantial rehabilitation of multifamily rental or cooperative
housing for moderate-income families, elderly, and the handicapped.
Single Room Occupancy (SRO) projects may also be insured under this
Section Section 221(d)(4) insures lenders against loss on mortgage
defaults. Section 221(d)(4) assists private industry in the construction
or rehabilitation of rental and cooperative housing for moderate-income
and displaced families by making capital more readily available.
The program allows for long-term mortgages (up to 40 years) that
can be financed with Government National Mortgage Association (GNMA)
Mortgage Backed Securities.
FHA mortgage insurance for HUD-approved lenders.
Insured mortgages may be used to finance the construction or rehabilitation
of detached, semidetached, row, walkup, or elevator-type rental
or cooperative housing containing 5 or more units. The program has
statutory mortgage limits which vary according to the size of the
unit, the type of structure, and the location of the project.
include public, profit-motivated sponsors, limited distribution, nonprofit cooperatives,
builder-seller, investor-sponsor, and general mortgagors.
All families are eligible to occupy dwellings in a structure whose mortgage is
insured under this program, subject to normal tenant selection. There are no income
limits. Projects may be designed specifically for the elderly or handicapped.
Section and 221(d)(4) is eligible for Multifamily Accelerated Processing
(MAP). The sponsor works with the MAP-approved lender who submits
required exhibits for the
pre-application stage. HUD reviews the
lender's exhibits and will either invite the lender to apply for a Firm Commitment
for mortgage insurance, or decline to consider the application further. If HUD
determines that the exhibits are acceptable, the lender then submits the Firm
Commitment application, including a full underwriting package, to the local Multifamily
Hub or Program Center for review. The application is reviewed to determine whether
the proposed loan is an acceptable risk. Considerations include market need, zoning,
architectural merits, capabilities of the borrower, availability of community
resources, etc. If the proposed project meets program requirements, the local
Multifamily Hub or Program Center issues a commitment to the lender for mortgage
Applications submitted by non-MAP lenders must be processed by
HUD field office staff under Traditional Application Processing (TAP). The sponsor
has a preapplication conference with the local HUD Multifamily Hub or Program
Center to determine preliminary feasibility of the project. The sponsor must then
submit a site appraisal and market analysis (SAMA) application (for new construction
projects), or feasibility application (for substantial rehabilitation projects).
Following HUD's issuance of a SAMA or feasibility letter, the sponsor submits
a firm commitment application through a HUD-approved lender for processing. If
the proposed project meets program requirements, the local Multifamily Hub or
Program Center issues a commitment to the lender for mortgage insurance.
The 221(d)(4) program is authorized by the National Housing Act
(12 U.S.C. 17151(d)(4). Program regulations are found at 24 CFR
221, subparts C and D. Basic TAP program instructions are in HUD
handbook 4560.01 - Mortgage Insurance for Multifamily Moderate Income
Housing Projects available on HUDclips.
Refer to the MAP web-site for guidelines and instructions, lender
approval requirements, and MAP coordinators. The program is administered
by the Office of Multifamily Housing Development.
In Fiscal year 2013, the Department insured mortgages for 160 projects
with 24.997 units, totaling $2.47 billion.