FHA Temporarily Relaxes Multifamily Insurance Rule

To make it easier for owners of apartment properties to secure financing, the Federal Housing Administration has temporarily relaxed one of its rules for insuring multifamily mortgages. Normally the agency, part of the Department of Housing and Urban Development, will not insure a loan to buy or refinance a multifamily property if it was built or substantially rehabilitated in the last three months. But now the FHA will waive this restriction for at least six months. For an FHA insurance application to be eligible under the waiver, the building must have a certificate of occupancy dated no later than July 31, 2008. In a Feb. 6 letter to lenders, FHA commissioner Brian D. Montgomery pointed out that HUD eased restrictions on insuring recently constructed or renovated properties once before, in 1974. The current waiver is more restrictive, he wrote, because it requires the FHA to ensure that the properties are viable and self-sustaining and will not be a financial drain on the multifamily property insurance program.