In Fiscal Year 2007, HUD did not insure any mortgages under this program. It is estimated that the Department will not insure any mortgages in Fiscal Year 2008.

Uses and Use Restrictions

Section 207 insures lenders against the loss on mortgage defaults.

Section 207 mortgage insurance, although still authorized, is no longer used for new construction and substantial rehabilitation.

It is however, the primary vehicle for the Section 223(f) refinancing program.

Multifamily new construction and substantial rehabilitation projects are currently insured under Section 221(d)(3) and Section 221(d)(4) programs.

Insured mortgages may be used to finance the construction or rehabilitation of rental detached, semidetached, row, walk-up, or elevator type structures with 5 or more units.

The program has statutory per unit mortgage limits which vary according to the size of the unit, the type of structure, and the location of the project.

There are also loan-to-value and debt service limitations.

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Eligibility Requirements

Applicant Eligibility

Eligible mortgagors include investors, builders, developers, and others who meet HUD requirements for mortgagors.

Beneficiary Eligibility

All families eligible to occupy dwellings in a structure whose mortgage is insured under the program, subject to normal tenant selection.

Credentials/Documentation

Documentation regarding the characteristics of the property and qualifications of the mortgagor are submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

Aplication and Award Process

Preapplication Coordination

The sponsor has an initial conference with the local HUD Multifamily Hub or Program Center to determine the preliminary feasibility of the project before a Site Appraisal and Market Analysis (SAMA) application (for new construction projects) or feasibility application (for substantial rehabilitation projects) is submitted.

An environmental assessment is required for this program.

This program is eligible for coverage under E.O.

12372, "Intergovernmental Review of Federal Programs." An applicant should consult the State office or official designated as the single point of contact for additional information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

This program is excluded from coverage under OMB Circular No.

A-102.

Application Procedures

The sponsor submits an application for a SAMA or feasibility letter. Following HUD's approval and issuance of a SAMA or feasibility letter, the Firm Commitment application is submitted to the local HUD Multifamily Hub or Program Center for processing. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedures

If the project meets program requirements, the local HUD Multifamily Hub or Program Center issues a commitment to the lender to insure the mortgage.

Deadlines

Deadlines are established on a case-by-case basis by the local HUD Multifamily Hub or Program Center.

Authorization

National Housing Act, as amended, Section 207, Public Law 75-424, 12 U.S.C. 1713.

Range of Approval/Disapproval Time

Processing time will depend upon the degree of preparation by the sponsor and HUD Multifamily Hub or Program Center workload.

Appeals

If an application for mortgage insurance is denied, HUD will state the reasons for the denial. If reapplication is desired, the applicant may modify the application and reapply.

Renewals

The term of a commitment to insure may be extended when more time is required to close the loan.

Assistance Considerations

Formula and Matching Requirements

The maximum amount of the loan is equal to 90 percent of the estimated value. The mortgage insurance premium is one-half percent of the mortgage amount. The total HUD application processing and commitment fees are $5 per $1,000 of the mortgage amount. Only $1 per $1,000 is required at the initial application for SAMA. No fee is required with a feasibility application for a rehabilitation project. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount.

Length and Time Phasing of Assistance

The mortgage term is 40 years, or not in excess of three-fourths of the remaining economic life, whichever is less.

Post Assistance Requirements

Reports

Any change of the mortgagor during the period of mortgage insurance must be approved by HUD.

Defaults in meeting the mortgage terms must be reported.

All mortgagors are required to submit annual financial statements to HUD.

All approved mortgagees at any time upon request by HUD must furnish copies of their latest financial statements.

Audits

The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgagee or mortgagor in order to determine their compliance and conformance with HUD regulations and standards.

Records

Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the HUD regulations.

Financial Information

Account Identification

86-4077-0-3-371.

Obigations

Reported under program 14.135.

Range and Average of Financial Assistance

The maximum amount of the loan is equal to 90 percent of the estimated value.

Regulations, Guidelines, and Literature

24 CFR 207 et seq.; Fact Sheet: Section 207 Rental Housing, no charge; HUD Handbook 4400.1, Project Mortgage Insurance Basic Section 207 Instructions, available on www.hudclips.org.

Information Contacts

Regional or Local Office

Persons are encouraged to communicate with Multifamily Hub or Program Center with jurisdiction for the proposed property. HUD Multifamily Hubs and Programs Centers are listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or at the Catalog Address Appendix IV.

Headquarters Office

Office of Multifamily Development, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410; Telephone: (202) 708-1142.

Criteria for Selecting Proposals

Not applicable.