The HUD MAP Guide: Multifamily Accelerated Processing for FHA Multifamily Loans
MAP, or Multifamily Accelerated Processing, is a streamlined loan application processing system developed for the specific purpose of speeding up approval times for HUD/FHA multifamily loans. In general, all rules for MAP loan applications are contained in the Multifamily Accelerated Processing (MAP) Guide, which was last published on January 29, 2016.
The HUD MAP guide sets national standards for borrowers, lenders, third-party consultants, HUD staff, and other relevant parties in regards to many of HUD’s multifamily financing programs. It discusses eligibility requirements for borrowers and lenders, general underwriting standards, and the loan application process, in addition to other important data. This most recent iteration of the guide gives MAP-approved lenders significantly more underwriting responsibility, while attempting to make sure program standards are relatively uniform across all HUD multifamily offices.
What Loan Programs are Covered by MAP?
Multifamily Accelerated Processing can now be used for almost all HUD multifamily loan programs. Specifically, the HUD/FHA multifamily programs covered by MAP include:
HUD 221(d)(4): Insures loans for the new construction or substantial renovation of multifamily properties, providing fully-amortizing loan terms up to 40 years with a 3-year interest-only construction period. Up to 85% LTV permitted for market rate properties, with higher leverage for affordable properties.
HUD 223(f): Insures loans for the acquisition or refinancing of multifamily properties, providing fully-amortizing loan terms up to 35 years. Like the 221(d)(4) program, up to 85% LTV is permitted for market rate properties, with higher leverage for affordable properties.
HUD 223(a)(7): Loan insurance for the refinancing of existing HUD/FHA- insured multifamily mortgages. Permits the initial loan loan term to be extended by up to 12 years.
HUD 241(a): Insures supplemental loans for property/building expansion, installation of safety features, or the installation of environmentally efficient infrastructure for properties currently with HUD-insured multifamily debt.
HUD 231: Insures loans for the new construction or substantial renovation of housing for the elderly or people with disabilities. Leverage of up to 85% is allowed for market rate properties, with higher LTVs permitted for affordable or rental assisted properties.
HUD 220: Insures loans for the new construction or substantial renovation of mixed use projects in specialized revitalization zones, primarily urban renewal areas.
It should be noted that the HUD 232 and 232/223(f) programs, which insure loans for the new construction, substantial rehabilitation, acquisition, and refinancing of seniors healthcare properties are not covered by Multifamily Accelerated Processing. Therefore, they are not substantially addressed in the MAP Guide. Instead, these programs are monitored and administered by HUD’s Office of Healthcare Programs (OHP).
What Else Should Borrowers Understand About the HUD MAP Guide?
Since the last edition of the HUD MAP Guide published in 2011, several important changes have occurred. Some of the most important changes include the consolidation of HUD Field Offices, the adoption of risk-based underwriting, and a new push towards electronic data submission and standardized data formats. Specifically, as a part of HUD’s Multifamily for Tomorrow initiative, HUD is combining its Multifamily Hubs and Program Centers into Regional Centers and Satellite Offices.
TAP: Traditional Application Processing vs. MAP: What’s the Difference?
In general, HUD has stopped accepting new applications using local “fast-track” processing, which was previously used to speed up HUD multifamily loan applications without the use of the MAP program. However, perhaps more importantly, HUD no longer accepts applications under Traditional Application Processing, unless a waiver has specifically been issued.Traditional Application Processing, or TAP, was long an alternative to the MAP program, even though it took longer and involved more paperwork. Now, if a borrower or lender wants to proceed with TAP, they will need to get a waiver from the HUD Headquarters’ Director of Multifamily Production, and may need to pay a higher application fee, due to the fact that TAP applications generally require more time and effort from HUD staff.
In practice, the main reason why this would be done is if a borrower wishes to take out a loan with an FHA multifamily lender who is not approved for the MAP program. Other situations where MAP may not be used include programs not covered by MAP (i.e. HUD 232 or 232/223(f) or HUD 213). TAP may also be utilized in situations where there is an identity of interest between various parties involved in a HUD multifamily loan transaction, as deals like this must typically must obtain special approval.
MAP Loan Origination vs. Closing and Servicing: What Should Borrowers Know?
While most MAP lenders originate, close and service their loans, other MAP-approved lenders only originate loans. In fact, after the Firm Commitment process is complete, a MAP lender can actually sell a Firm Commitment to another MAP lender, which will close and service the loan (and will manage the construction loan administration, if needed). This type of transaction is only permitted if the originating MAP lender does not have an identity of interest with the borrower.
In order to make this transaction work, the originating lender must inform HUD and identify the closing lender as quickly as possible. In addition, for projects that involve a construction loan, the closing lender also needs to select the construction loan administrator in a timely fashion. Closing/servicing lenders must be FHA multifamily lenders, but do not necessarily need to be MAP approved lenders (though they often are).
What the HUD MAP Guide Says About Loan Consultants/Brokers and Identity of Interest
HUD understands that loan consultants, also referred to as loan brokers, are an important part of the HUD multifamily lending process. However, in most circumstances, loan consultants are not permitted to have an identity of interest with the borrower or sponsor of a real estate project they are consulting on. However, there are some mitigating circumstances, including:
The broker/lender has informed HUD of the identity of interest prior to the submission of a borrower’s mortgage insurance application AND this has been approved by HUD, AND,
The consultant/brokers regular business involves brokering loans.
Construction Loan Inspections and the HUD MAP Guide
For HUD multifamily loans with construction periods, HUD will typically order one inspection per month throughout the duration of the construction period, with more inspections required in certain situations. The cost amount for each construction item needs to be approved by HUD during the first and last construction advance, as well as for any change orders. MAP lenders are responsible for preparing and authorizing all construction draws.
The HUD MAP Guide vs. HUD Handbooks: Which Takes Priority?
In general, the MAP Guide already incorporates much of the HUD Handbooks and other relevant official information sources, such as HUD Notices and Mortgagee Letters. For conflicts between the MAP Guide and other HUD resources, the MAP Guide should be followed first. TAP applications are generally not affected by the MAP Guide, so all relevant HUD multifamily materials should still be considered accurate, unless they have been specifically updated and amended by HUD.
The HUD MAP Guide: An Essential Resource for Borrowers
As the HUD MAP Guide contains nearly everything there is to know about many of the FHA’s most popular multifamily mortgage programs, it is an invaluable resource for borrowers. While reading the entire 500-page guide may be onerous (and unnecessary), reading and analyzing relevant sections can shed light on the specifics of HUD’s rules, which can often be confusing for those who don’t have significant experience with FHA multifamily lending.
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