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 FHA Removes Temporary COVID-19 Underwriting Mitigants for Multifamily 223(f) Transactions
The Federal Housing Administration (FHA) announced today that it is removing temporary COVID-19 underwriting mitigants for multifamily transactions insured under Section 223(f) of the National Housing Act, effective immediately for all insured transactions that have yet to reach endorsement. The temporary requirements for nine months of debt service reserves, 250 percent repair escrows, and limits on cash-out refinance transactions were originally put in place in April 2020 to counter-balance potential financial effects resulting from the COVID-19 pandemic.
In the almost two years following implementation of the policies, the FHA Multifamily portfolio proved consistently resilient to significant COVID-19 impacts, remaining at a less than one-percent default rate.
This change allows lenders to return to using standard Multifamily Accelerated Processing (MAP) Guide policies going forward.
“FHA multifamily mortgage insurance helps to create much-needed rental homes in communities nationwide,” said Ethan Handelman, Deputy Assistant Secretary for Multifamily Housing. “Returning to our normal underwriting safeguards will put more capital to work for affordable housing.”
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