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HUD Updates MAP Guide To Further Encourage Affordable Housing Development and Recapitalization

The mission statement of the Department of Housing and Urban Development (HUD) remains focused

The mission statement of the Department of Housing and Urban Development (HUD) remains focused on affordable housing, nonetheless it has evolved with the times to address the growing need for not only preserving, but also creating affordable housing across the country. Through its Rental Assistance Demonstration (RAD) program, Choice Neighborhood program and by way of the recent revisions to the HUD MAP Guide, HUD is encouraging the development, recapitalization, and financing of affordable housing assets.

The Revamped HUD MAP Guide

The recently revised HUD MAP Guide (issued January 29, 2016) is opening the door for more property owners to rehab their sites under the 223(f) refinance program without jumping through the hoops of a substantial rehabilitation. By increasing the high cost factor from $6,500 to $15,000 per unit, doing away with the antiquated 15% rehab cost to value ratio threshold, and integrating the IBC standards for the various levels of repair, HUD is allowing owners of affordable housing to leverage debt to accomplish much needed renovations under a streamlined refinance tool.

In addition to this, HUD is also offering a discount on Mortgage Insurance Premiums (MIP) for projects that can achieve an Energy Star Benchmarking Score of 75 or greater and Green Certification. While this will involve additional due diligence and documentation (specifically a Level II Energy Audit) the potential savings over the life of the loan could be hundreds of thousands, if not millions of dollars. Not to mention the operating cost savings that will be realized once the energy performance improvements are implemented. These changes were long overdue, and they are an important step in the department’s ongoing commitment to providing affordable housing, while creating practical avenues for owners to reinvest capital into their properties.

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