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| 14.189 QUALIFIED PARTICIPATING ENTITIES (QPE) RISK SHARING |
| (542(b) Risk Sharing Program) |
| FEDERAL AGENCY |
| HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT |
| AUTHORIZATION |
| Housing and Community Development Act of 1992, Section 542(b), Public Law 102-550, 12 U.S.C. 1701; Public Law 106-377. HUD's fiscal year 2001 Appropriations Bill amended Section 235 of the Housing and Community Development Act of 1992 to extend the 542 Risk Sharing Program to a permanent multifamily insurance program. |
| OBJECTIVES |
| Under this program HUD provides reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by qualified participating entities (QPEs) and/or its approved lenders. The program encourages the development and preservation of affordable housing. The Section 542(b) program was originally designed as a pilot to test innovative mortgage insurance and reinsurance products to provide affordable multifamily housing through a partnership between HUD and QPEs, including Government Sponsored Enterprises, financial institutions, and the Federal Housing Finance Board. |
| TYPES OF ASSISTANCE |
| Guaranteed/Insured Loans. |
| USES AND USE RESTRICTIONS |
| QPEs and/or its approved lenders may originate and underwrite affordable housing loans. HUD's mortgage credit enhancements are used to support the underwriting and production strengths of Fannie Mae, Freddie Mac, and other qualified Federal, State, and local public financial and housing institutions. In the event of a default, the QPE will pay all costs associated with loan disposition and will seek reimbursement from HUD. In most cases, the HUD risk share will be 50 percent. The program provides a new insurance authority independent of the National Housing Act. |
| Applicant Eligibility |
| Eligible mortgagors include investors, builders, developers, public entities, and private nonprofit corporations or associations may apply to a qualified QPE and/or its lender. |
| Beneficiary Eligibility |
| Individuals, families, and property owners may be eligible for affordable housing. |
| Credentials/Documentation |
| Documentation regarding the characteristics of the property and the qualifications of the mortgagor are submitted to the QPE and/or its lender. |
| Preapplication Coordination |
| An applicant should consult the QPE as the single point of contact for more information on the process. The sponsor will have a preapplication meeting with the QPE. This program is excluded from coverage under E.O. 12372. |
| Application Procedure |
| An applicant submits a formal application directly to the QPE. |
| Award Procedure |
| QPEs are vested with the maximum amount of processing responsibilities and decision-making to approve or reject individual projects. |
| Deadlines |
| Deadlines are established on a case-by-case basis by the QPE. |
| Range of Approval/Disapproval Time |
| Within 15 days of HUD's receipt of a complete and acceptable Risk Sharing Request, HUD will execute the Addendum to Risk Sharing Agreement which signifies that HUD has undertaken a Risk Sharing Obligation for a specific mortgage loan. |
| Appeals |
| If a Risk Sharing Request is refused, HUD will state the reasons for the refusal. |
| Renewals |
| HUD will provide reinsurance on multifamily housing projects whose loans are originated, underwritten, serviced, and disposed of by QPEs. |
| Formula and Matching Requirements |
| Not applicable. |
| Length and Time Phasing of Assistance |
| Not applicable. |
| Reports |
| QPEs must submit a semi-annual report listing (1) the original mortgage amount and outstanding unpaid principal balance for each reinsured loan, and (2) the status of the reinsured loan. |
| Audits |
| The Department of Housing and Urban Development reserves the right to audit the Mortgage Loans which HUD has reinsured. |
| Records |
| QPEs are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions. |
| Account Identification |
| 86-4077-0-3-371. |
| Obligations |
| (Insured Loans) FY 07 $12,424,100; FY 08 est $11,250,000; and FY 09 est $15,000,000. |
| Range and Average of Financial Assistance |
| Loan sizes range from $1,300,000 to $5,600,000 with an average of $3.4 million. Project sizes range from 48 to 160 units with an average of 108 units. |
| PROGRAM ACCOMPLISHMENTS |
| In Fiscal Year 2007, HUD insured mortgages for 13 projects with 1,415 units, totaling $44.3 million units. It is estimated that the Department will insure the same number of mortgages in Fiscal Year 2008. |
| REGULATIONS, GUIDELINES, AND LITERATURE |
| The Section 542(b) program was implemented without regulations. |
| Regional or Local Office |
| Persons are encouraged to communicate with the nearest local HUD Multifamily Hub or Program Center listed at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm or the nearest HUD Field Office listed 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. Use the same number for FTS. |
| Web Site Address |
| http://www.hud.gov/offices/hsg/hsgmulti.cfm |
| RELATED PROGRAMS |
| 14.188, Housing Finance Agencies (HFA) Risk Sharing. |
| EXAMPLES OF FUNDED PROJECTS |
| Not applicable. |
| CRITERIA FOR SELECTING PROPOSALS |
| Not applicable. |
|
General Services Administration Office of Chief Acquisition Officer Regulatory and Federal Assistance Division (VIR) |
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