Commitment Authority for the Federal Housing Administration to issue mortgage insurance for multifamily projects including healthcare and senior housing has been exhausted through the end of fiscal year 2013.
This fiscal year, ending September 30, allowed the Department of Housing and Urban Development under Congress $25 billion across its multifamily, healthcare and risk share programs, the balance of which has been exhausted as of September 16, HUD informed lenders this week.
“Under HUD’s budget, the Federal Housing Administration has finite authority to issue mortgage insurance commitments under its Multifamily and Healthcare programs,” wrote HUD deputy assistant secretaries Benjamin Metcalf and Roger Miller. “…As of today, September 16, 2013, FHA has exhausted its Commitment Authority for this fiscal year.
For those applying for HUD financing, applications will go into HUD’s existing queue with the expectation of receiving new commitment authority beginning October 1. The Obama Administration’s requested $30 billion in commitment authority for Fiscal Year 2014.
While the notice was anticipated by lenders, the expected delays were estimated to be in the measure of roughly two months for non-priority loans, sources told SHN when HUD began prioritizing requests earlier this year. While the pace was expected, it does present some delays for lenders.
“[HUD] put the brakes on some lending back in June, so some deals have been delayed two to three months,” says Michael Vaughn, vice president of finance for Walker & Dunlop (NYSE: WD). “There have been a number delayed, but not a very large percentage of the total.”
Looking ahead to October 2, at which point new commitment authority for fiscal year 2014 should begin, lenders expect the pace to quicken with some deals already on deck and the queue rising in the interim.
“Hopefully next year the commitment authority will be adequate,” Vaughn says, pointing to a difference in interest rate environment that could change potential demand for refinance transactions in the healthcare lending space.
Firm commitments as of September 16 will be honored, HUD said upon its announcement, and may continue to move through endorsement and closing. However, new applications accepted through September 30 will be placed in the queue behind other transactions that have been placed already.
Written by Elizabeth Ecker
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