The Federal Housing Administration (FHA) said the recent increase in the dollar amount threshold for large multifamily loans will simplify the process of assessing risks for insurers of multifamily housing developments.
The FHA’s Mortgagee Letter implemented two policy changes. One is the “threshold for large loans has increased to $120 million, up from $75 million, an update that hasn’t occurred since 2014.” The increase will enable more transactions “to use standard underwriting processes when submitted for FHA multifamily insurance,” a U.S. Department of Housing and Urban Development (HUD) news release said. The other policy change provides “a method to annually revise the large loan threshold based on inflation,” the Mortgagee Letter said.
“NAR applauds FHA for increasing the ‘large multifamily loans’ threshold for the first time since 2014,” National Association of Realtors President Kenny Parcell said in the release. “The real estate market looks drastically different than it did almost 10 years ago, and this increase reflects the changes in the market and the need to speed up and encourage multifamily rental development.
"NAR has advocated for this specific adjustment to the threshold dollar amount just last year, and we commend the FHA for stepping up to make this long overdue and common sense change," he added. "Our association thanks the agency for this increase, and possible future increases, that will create greater flexibility for lenders and facilitate the creation of more rental housing across this country.”
The FHA will review the threshold annually, possibly increasing it in $5 million increments as needed, the release said.
“The changes are designed to simplify underwriting for multifamily housing development without presenting undue risk to FHA, and to provide for regular adjustments to the threshold so it does not unduly lag market changes,” HUD said.
Representing more than 1.5 million members in residential and commercial real estate industries, the National Association of Realtors is the largest trade association in the nation, the release said.
