Section 241(a) insures mortgage loans to finance repairs, additions,
and improvements to multifamily rental housing and health care facilities
with FHA insured first mortgages or HUD-held mortgages.
Section 241(a) insures lenders against loss on mortgage defaults.
The program is intended to keep the project competitive, extend
its economic life, and to finance the replacement of obsolete equipment.
Insured mortgages finance repairs, additions, and improvements to
multifamily projects, group practice facilities, hospitals, or nursing
homes already insured by HUD or held by HUD. Major movable equipment
for insured nursing homes, group practice facilities, or hospitals
may be covered by a mortgage under this program.
Type of Assistance:
FHA mortgage insurance for HUD-approved lenders.
Insured mortgages may finance either: (1) additions and improvements
of multifamily housing projects, nursing homes, hospitals, and assisted
living facilities already subject to HUD/FHA insured mortgages or
mortgages held by HUD; (2) finance energy conservation improvements.
The proceeds of a loan involving an insured nursing home, hospital,
or assisted living facility may also be used to purchase equipment
to be used in the operation of the facility. The maximum insurable
loan is 90 percent of the value of the addition or improvement,
or an amount which, when added to the outstanding balance of the
existing insured mortgage, does not exceed the amount insurable
under the program pursuant to the mortgage covering such project
of facility that is insured. Where the project is covered by a mortgage
held by HUD the principal amount of the loan shall be in an amount
acceptable to the Secretary. Contractors must comply with prevailing
wage requirements under the Davis-Bacon Act. 241(a) for apartments
requires appropriated credit subsidy, which is limited.
Owners of a multifamily project or facility already subject to a
or held by HUD.
Individuals, families, and owners of multifamily projects.
The sponsor will have a pre-application conference with the local
HUD Multifamily Hub or Program Center to determine the feasibility
of the proposed improvements before submitting a firm commitment
application. The sponsor must then submit a firm commitment application
to the local Multifamily Hub or Program Center through a HUD-approved
lender for processing. If the project meets program requirements,
the local Multifamily Hub or Program Center issues a commitment
to the lender for mortgage insurance.
This program is authorized under the National Housing Act, as amended,
Section 241, Public Law 90-448 (12 U.S.C. 1715) and Public Law 94-375
(12 U.S.C. 1715Z-6). The program regulations are found in 24 CFR
241. The basic program instructions are in HUD Handbook 4585.1-Supplemental
Loans for Project
Mortgage Insurance available on HUDclips.
The program is administered by the Office Multifamily Housing Development.
In fiscal year 2012, the Department insured mortgages for 1 projects
with 312 units, totaling $7.1 million.