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Multifamily Mortgage Risk-Sharing Programs
(Sections 542(b) and 542(c))

Two multifamily mortgage credit programs under which Fannie Mae, Freddie Mac, and state and local housing finance agencies share the risk and the mortgage insurance premium on multifamily housing.

Nature of Program: Section 542(b) of the Housing and Community Development Act of 1992 authorizes HUD to enter into reinsurance agreements with Fannie Mae, Freddie Mac, qualified financial institutions (QFIs), and the Federal Housing Finance Board.  The agreements provide for risk-sharing on a 50-50 basis. Currently, only Fannie Mae and Freddie Mac have active risk-sharing programs with HUD.

Section 542(c) enables HUD to carry out a program in conjunction with qualified state and local housing finance agencies (HFAs) to provide federal credit enhancement for loans for affordable multifamily housing through a system of risk-sharing agreements.  Agreements provide for risk-sharing between 10 percent and 90 percent.

The Fiscal Year 2001 Appropriations Act changed the program from a pilot program into a permanent insurance authority.

Applicant Eligibility: Fannie Mae, Freddie Mac, QFIs, HFAs, and the Federal Housing Finance Board.

Legal Authority: Section 542 of the Housing and Community Development Act of 1992 (12 U.S.C. 1707 note).  Regulations are at 24 CFR part 266 for the Section 542(c) program.  Section 542(b) is implemented through a housing notice and negotiated agreements without regulations.

Administering Office: Assistant Secretary for Housing - Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.

Information Sources: Administering office, and for Section 542(c), state housing finance agencies.

Current Status: Active.