FHA Offers Incentives for Owners Who Invest in Opportunity Zones
The Federal Housing Administration (FHA) recently announced a package of incentives to encourage multifamily property owners to invest in thousands of neighborhoods located in Opportunity Zones across the nation.
FHA is introducing reduced application fees paid by property owners applying for certain multifamily mortgage insurance programs for the development or rehabilitation of apartment units located, or proposed to be located, in Opportunity Zones. In addition, FHA is designating teams of senior underwriters to review these applications to ensure the most attentive and timely processing.
Reduced Application Fees. Applicants to FHA's New Construction and Substantial Rehabilitation (Section 221(d)(4)), Urban Renewal and Concentrated Development (Section 220), and Purchase or Refinance of Existing Multifamily Property (Section 223(f)) multifamily mortgage insurance programs will be eligible for significantly lower application fees provided the property is located within qualified Opportunity Zones. For transactions that are defined as “broadly affordable,” FHA's application fee will be reduced from the current $3 per thousand dollars of the requested mortgage amount to $1 per thousand dollars of the requested mortgage amount, resulting in an average cost saving to applicants of approximately $28,000. “Broadly affordable” is defined as developments in which at least 90 percent of the units are Section 8-eligible or deemed affordable under the Low-Income Housing Tax Credit (LIHTC) program.
For “market rate” and “affordable” transactions, FHA will reduce application fees from $3 to $2 per thousand dollars of the requested mortgage amount, resulting in an estimated average cost savings of $14,000.
Designated Senior Underwriters. FHA will designate seasoned underwriters to process applications located in Opportunity Zones to ensure expert and expedient reviews. Applications must meet the following criteria to qualify for reduced fees and designated underwriting:
- The application is submitted under FHA's Section 221(d)(4), Section 220, or Section 223(f) program for a property located in, or proposed to be located in, a qualified Opportunity Zone, and/or
- The application involves an investment from a Qualified Opportunity Fund (QOF).