In the wake of encouraging commentary last week and this week by HUD Secretary Ben Carson regarding manufactured housing – which included his tying that in with Opportunity Zones – comes this news today from HUD.
To set the stage for this release, ICYMI or need a refresher, see the report at the link here that contains the official statement by Secretary Carson on manufactured housing, which included his thoughts on Opportunity Zones.
FHA OFFERS INCENTIVES FOR PROPERTY OWNERS WHO INVEST IN OPPORTUNITY ZONES
Lower costs and dedicated underwriters to stimulate housing investment in distressed neighborhoods
WASHINGTON – The Federal Housing Administration (FHA) today announced a package of incentives to encourage multi-family property owners to invest in thousands of neighborhoods located in Opportunity Zones across the nation. Read today’s Housing Notice
FHA is introducing reduced application fees paid by property owners applying for certain multifamily mortgage insurance programs for the development or rehabilitation of apartment units located, or proposed to be located, in Opportunity Zones. In addition, FHA is designating teams of senior underwriters to review these applications to ensure the most attentive and timely processing.
When more investors can apply for benefits in Opportunity Zones, more investors can supply benefits in Opportunity Zones. And that’s exactly the intention of today’s Notice,” said Secretary Carson. “These FHA incentives, combined with the preference points HUD already offers grantees for activities in Opportunity Zones, show how this Administration is maximizing the power of public-private partnerships to never forget – and always lift up – our nation’s “the forgotten men and women.”
Reduced Application Fees
Applicants to FHA’s New Construction and Substantial Rehabilitation (Section 221(d)(4)), Urban Renewal and Concentrated Development (Section 220), and Purchase or Refinance of Existing Multifamily Property (Section 223(f)) multifamily mortgage insurance programs will be eligible for significantly lower application fees provided the property is located within qualified Opportunity Zones. For transactions that are defined as ‘broadly affordable,’ FHA’s application fee will be reduced from the current $3 per thousand dollars of the requested mortgage amount to $1 per thousand dollars of the requested mortgage amount, resulting in an average cost saving to applicants of approximately $28,000. ‘Broadly affordable’ is defined as developments in which at least 90 percent of the units are Section 8-eligible or deemed affordable under the Low-Income Housing Tax Credit (LIHTC)
“When more investors can apply for benefits in Opportunity Zones, more investors can supply benefits in Opportunity Zones. And that’s exactly the intention of today’s Notice,” said Secretary Ben Carson. “These FHA incentives, combined with the preference points HUD already offers grantees for activities in Opportunity Zones, show how this Administration is maximizing the power of public-private partnerships to never forget – and always lift up – our nation’s “forgotten men and women.”
For ‘market rate’ and ‘affordable’ transactions, FHA will reduce application fees from $3 to $2 per thousand dollars of the requested mortgage amount, resulting in an estimated average cost savings of $14,000. Read more about the definitions of broadly affordable and affordable in the Federal Register.
Designated Senior Underwriters
FHA will designate seasoned underwriters to process applications located in Opportunity Zones to ensure expert and expedient reviews. Applications must meet the following criteria to qualify for reduced fees and designated underwriting:
- The application is submitted under FHA’s Section 221(d)(4), Section 220, or Section 223(f) program for a property located in, or proposed to be located in, a qualified Opportunity Zone, and/or:
- The application involves an investment from a Qualified Opportunity Fund (QOF).
The new incentives offered by FHA are available immediately for applicants of market-rate properties that have not yet submitted a pre-application, and for applicants for affordable properties that have not yet applied.
Created under the 2017 Tax Cuts and Jobs Act, Opportunity Zones are intended to stimulate economic development and job creation in distressed low-income communities by incentivizing long-term capital investment. The program offers capital gains tax relief to those who invest in these targeted distressed areas. This program is anticipated to spur approximately $100 billion of private capital investment in Opportunity Zones. There are more than 8,700 census tracts designated as Opportunity Zones in all 50 States and in the U.S. territories. Read more about the Opportunity Zones program.
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
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Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.
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