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Disadvantages of the 223(f) Program
  • Longer processing times - 120 days at a minimum (6-9 months is typical)
  • Higher fees - HUD and FHA fees add to the overall cost of the loan
  • Mortgage Insurance Premiums (MIP) - Initial and annual premiums
  • Annual audited operating statements required
  • Replacement reserve escrows required
  • HUD property inspections required
  • Owner distribution restrictions
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    Is the 223(f) Multifamily Program the Right Choice for Me
    At CommercialBanc, we offer apartment loans from our own portfolio - Banc Series, HUD/FHA, Fannie Mae, Freddie Mac and partner banks. Our goal is to provide the product that best meets your needs. For many borrowers, a HUD FHA insured apartment mortgage is the perfect choice.
    Why Consider a HUD FHA apartment loan:
  • Purchases up to the lesser of 83% loan-to-value or 83% loan-to-cost including loan costs and repairs
  • 35 year fixed rates / 35 year amortization / No balloon payment
  • Avoid interest rate risk and costs associated with refinancing
  • Property located in a declining value or distressed market and require up to 83% loan-to-value financing
  • Property located in a smaller (population) market
  • Require or prefer a non-recourse loan
  • Flexible prepay - No yield maintenance or defeasance prepay risk
  • Loan is assumable should you sell
  • Available for profit and not-for-profit borrowers
  • Detached structures and row houses eligible
  • Require funds for repairs or improvements
  • HUD FHA supplemental loan (2nd mortgage) available to fund property repairs or improvements
    		•
    HUD FHA 223(f) Program Costs and Fees
  • Third Party Reports: appraisal, engineering report, environmental analysis and flood certification
  • FHA Inspection Fee: 1% of repair costs or $30 per unit if repairs are less than $3,000 unit
  • FHA Exam Fee: $3 per $1,000 of the loan balance
  • Financing Fee: 1%-3% depending on loan size and loan complexity
  • Permanent Placement Fee: 1%-2%
  • First Year Mortgage Insurance Premium: 1% of loan amount
  • Monthly Mortgage Insurance Premium: .45%
  • Borrower's Legal: Estimated at $10,000
  • Title & Recording Fees: TBD
    		•
    HUD FHA 223(f) Escrow and Reserves
  • Tax and Insurance Impounds: Required
  • Replacement Reserves: Required - Monthly deposit required and amount depends on property condition
  • Initial Deposit to Reserve Fund: Required - One time deposit may be required depending on property condition
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