In fiscal year 2007, HUD insured 2 mortgages with 262 units totaling $8.8 million. It is estimated that the Department will insure approximately the same number of projects in Fiscal Year 2008.

Uses and Use Restrictions

Section 231 insures lenders against loss on mortgages.

Section 231 was designed to increase the supply of rental housing specifically for the use and occupancy of elderly persons and/or persons with disabilities.

Insured mortgages may be used to finance construction or rehabilitation of detached, semidetached, walk-up, or elevator type rental housing designed for occupancy by elderly or handicapped individuals and consisting of 8 or more rental units.

The program has statutory per unit mortgage limits which vary according to the size of the unit, the type of structure, and the location of the project.

There are also loan-to-replacement cost and debt service limitations.

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Eligibility Requirements

Applicant Eligibility

Eligible mortgagors include private profit-motivated developers, and nonprofit sponsors.

Beneficiary Eligibility

All elderly or handicapped persons are eligible to occupy apartments in a project whose mortgage is insured under the program.

Credentials/Documentation

Documentation regarding the characteristics of the property and the qualifications of the mortgagor must be submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

Aplication and Award Process

Preapplication Coordination

The sponsor has an initial conference with the local HUD Multifamily Hub and Program Center to determine the preliminary feasibility of the project before a site appraisal and market analysis (SAMA)application (for new construction projects) or feasibility application (for substantial rehabilitation projects) is submitted.

An environmental assessment is required for this program.

This program is eligible for coverage under E.O.

12372, "Intergovernmental Review of Federal Programs." An applicant should consult the state office or official designated as the single point of contact for additional information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

This program is excluded from coverage under OMB Circular No.

A-102.

Application Procedures

The sponsor submits a formal application through a HUD-approved mortgagee to the local HUD Multifamily Hub or Program Center. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedures

If the project meets program requirements, the local HUD Multifamily Hub or Program Center issues a commitment to the lender for mortgage insurance.

Deadlines

Deadlines are established on a case-by-case basis by the local HUD Multifamily Hub or Program Center.

Authorization

National Housing Act, as amended, Section 231, Public Law 86-372, 73 U.S.C. 654, 12 U.S.C. 1715(V).

Range of Approval/Disapproval Time

Processing time varies depending upon the degree of preparation by the sponsor and HUD Multifamily Hub and Program Center workload.

Appeals

If an application for mortgage insurance is denied, HUD will state the reasons for the denial. If reapplication is desired, the applicant may modify the application and reapply.

Renewals

The term of a commitment to insure may be extended when more time is required.

Assistance Considerations

Formula and Matching Requirements

Formula and Matching Requirements: For nonprofit and public mortgagors, the maximum amount of the loan is equal to 100 percent of the estimated replacement cost (or 100 percent of project value for projects involving rehabilitation). For all other mortgagors, the maximum amount of the loan is up to 90 percent of the replacement cost (90 percent of project value for projects involving rehabilitation). The annual mortgage insurance premium is one-half percent of the mortgage amount. The HUD application processing and commitment fees are $3 per $1,000 of the mortgage amount. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount.

Length and Time Phasing of Assistance

The maximum mortgage term is 40 years or not in excess of three-fourths of the remaining economic life, whichever is less.

Post Assistance Requirements

Reports

Any change of the mortgagor during the period of mortgage insurance must be approved by HUD.

Defaults in meeting the mortgage terms must be reported.

All mortgagors are required to submit an annual financial statement to HUD.

All approved mortgagees at any time upon request by HUD must furnish copies of their latest financial statements.

Audits

The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgagee or mortgagor in order to determine their compliance and conformance with HUD regulations and standards.

Records

Mortgagees are required to service and maintain records in accordance with acceptable mortgage practice of prudent lending institutions and the HUD regulations.

Financial Information

Account Identification

86-4077-0-3-371.

Obigations

Reported under program 14.135.

Range and Average of Financial Assistance

For nonprofit and public mortgagors, the maximum amount of the loan is equal to 100 percent of the estimated replacement cost. For all other mortgagors, the maximum amount of the loan is up to 90 percent of the replacement cost.

Regulations, Guidelines, and Literature

Fact Sheet, Section 231 for the Elderly; 24 CFR 231.1 et seq. Section 231, Housing for the Elderly for Project Mortgage Insurance, HUD Handbook 4570.1, no charge, available on HUDCLIPS at http://www.hudclips.org.

Information Contacts

Regional or Local Office

Persons are encouraged to communicate with the Multifamily Hub or Program Center with jurisdiction for the proposed property. HUD Multifamily Hubs or Program Centers are listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm and in the Catalog Address Appendix IV.

Headquarters Office

Office of Multifamily Development, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410. Telephone: (202) 708-1142.

Criteria for Selecting Proposals

Not applicable.