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SMF and HUD Multifamily Loan Activity Solid in Fiscal Year 2017

As summer draws to a close, so does the end of the year. The HUD Fiscal Year (FY), that is, which ends on September 30. Based on data through the beginning of May, it looks like FY 2017 will be another successful one for HUD’s multifamily mortgage insurance programs.

Through early May, HUD had closed almost $8 billion in multifamily loans. Approximately $2 billion were refinances under the Section 223(a)(7) program, which insures loans for projects already insured by HUD; $4 billion were insured under the Section 223(f) program for apartment purchases or refinances; and, about $1.8 billion were for new construction (and substantial rehabilitation) under the Section 221(d)(4) program. If HUD continues at that pace, it will have closed about $12.9 billion in multifamily loans by fiscal year-end. This would be HUD’s best multifamily performance since FY 2013, when it closed close to $18 billion in loans. FYs 2013 – 2016 saw HUD’s multifamily production at approximately $10 billion annually.

One of the factors in the projected increase in production over the past three years is the Multifamily Transformation, which has reorganized how HUD delivers multifamily mortgage insurance. The following chart, provided by HUD, shows the steady improvement in multifamily loan processing timeframes since FY 2012.

Sims Mortgage Funding (SMF) had another solid year in the multifamily space in FY 2017: we have closed loans under the Section 221(d)(4) new construction, Section 223(a)(7) and Section 223(f) programs for projects in Minnesota, Maryland, New Jersey and Louisiana. These loans total slightly over $55 million, and provided capital to build new market-rate units, preserve affordable housing, and strengthen HUD’s existing multifamily portfolio by reducing debt service costs.