The Federal Housing Administration unveiled a new pilot program on Friday, Feb. 10, that will accelerate the approval process for the purchase or refinancing of multi-family rental properties assisted through the Low-Income Housing Tax Credit (LIHTC).
The pilot program will be launched in Chicago, Detroit, Boston, and Los Angeles, and the FHA believes it will be able to cut the time needed to review and approve LIHTC financing applications from about one year down to just 90 to 120 days.
Expediting the review and approval process is necessary because if certain LIHTC performance deadlines (bond closing) aren’t met, it could result in forfeit of credit allocations or bond reservations, and could hinder a borrower’s ability to secure tax credits for future transactions.
“It has become clear that we need to rethink our process at FHA if we hope to leverage LIHTC to the maximum degree possible,” said FHA’s Acting Commissioner Carol Galante in a statement. “This pilot program will test our ability to significantly cut our review process so we can put people in affordable homes and provide unique financing options for developers.”
If the pilot program is successful, it could “dramatically increase” the production of affordable rental products nationwide, according to Marie Head, the deputy assistant secretary for Multi-Faamily Housing.
More details for the pilot program can be read here.
Written by Alyssa Gerace