Section 220 insures loans for multifamily housing projects in urban
renewal areas, code enforcement areas, and other areas where local
governments have undertaken designated revitalization activities.
Section 220 insures lenders against loss on mortgage defaults. Section
220 provides good quality rental housing in urban areas that have
been targeted for overall revitalization. Section 220 insures mortgages
on new or rehabilitated housing located in designated urban renewal
areas, and in areas with concentrated programs of code enforcement,
and neighborhood development.
Type of Assistance:
FHA mortgage insurance for HUD-approved lenders.
Insured mortgages may be used to finance construction or rehabilitation
of detached, semi-detached, row, walk-up, or elevator type rental
housing or to finance the purchase of properties which have been
rehabilitated by a local public agency. Properties must consist
of two or more units and must be located in an urban renewal area,
in an urban development project, code enforcement program area,
urban area receiving rehabilitation assistance as a result of natural
disaster, or area where concentrated housing, physical development,
or public service activities are being carried out in a coordinated
The program has statutory mortgage limits, which may vary according
to the size of the unit, the type of structure, and the location
of the project. There are also loan-to-replacement cost and debt
service limitations. The maximum amount of the mortgage loan may
not exceed 90 percent of the estimated replacement cost for new
construction. For substantial rehabilitation projects, the maximum
mortgage amount is 90 percent of the estimated cost of repair and
rehabilitation and the estimated value of the property before the
repair and rehabilitation project. The maximum mortgage term is
40 years, or not in excess of three-fourths of the remaining economic
life of the project, whichever is less. Contractors for new construction
or substantial rehabilitation projects must comply with prevailing
wage standards under the Davis-Bacon Act.
Eligible mortgagors include private profit motivated entities, public
bodies, and others who meet HUD requirements for mortgagors.
All families are eligible to occupy a dwelling in a structure where
the mortgage is insured under the program, subject to normal tenant
Section 220 is eligible for Multifamily Accelerated Processing (MAP).
For new construction and substantial rehabilitation loans, 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 project meets program requirements,
the Multifamily Hub or Program Center issues a commitment to the
lender for mortgage insurance.
Applications submitted by non-MAP lenders must be processed by
HUD field office staff under Traditional Application Processing
(TAP). The sponsor has a pre-application 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 application (SAMA) (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.
This program is authorized by Section 220(a) and (h), National Housing
Act (12 U.S.C. 1715k. Regulations are in 24 CFR 200 et seq., 24
CFR 220.1 et seq. The basic program instructions are in HUD Handbook
4555.1. - Rental Housing in Urban Renewal Areas for Project available
on HUDclips. Refer to the MAP
web site for guidelines, 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 4 projects
with 788 units, totaling $111.3 million.