Federal Housing Administration (FHA) Title I Property Improvement Loans in Public Rehabilitation Programs: Case Studies

摘要

Second in a series designed to promote the use of Title I Property Improvement Loan Insurance as a tool in Community Development Block Grant (CDBG) rehabilitation, this guide offers a detailed study of the use of Title I by local governments, lenders, and State housing finance agencies in six rehabilitation programs. Title I relies on private sector lending procedures more than any other Federal housing program. Participating financial institutions make all loan determinations using conventional credit standards, and HUD provides insurance against defaults. The cost of the insurance coverage is one - half percent of the face value of the loan. In return, the Federal Government establishes an insurance reserve for participating Title I lenders and pays 90 percent of each defaulted loan. A maximum of 12 percent is charged, 15 years is the maximum time allowed to repay the loan, and a maximum loan for one - to - two - unit residential or commercial structures is $15,000. Properties with two or more units have an upper limit of $25,000. Loans may be used to finance alterations, repairs, and improvements on existing structures only for work that will be a permanent part of the real estate. Three case studies described use some form of leveraging along with the Federal Housing Administration (FHA) Title I insurance program: Hoboken, N.J., Municipal Home Improvement Program; Westchester County, N.Y., CDBG Rehabilitation Programs; and Security Pacific National Bank, Los Angeles, Calif., Property Improvement Program for Community Development. Three programs described use tax - exempt bond financing: Minnesota Housing Finance Agency Home Improvement Loan Program, New Jersey Mortgage Finance Agency Home Improvement Loan Program, and Pittsburgh Urban Redevelopment Authority Home Improvement Loan Program. Notes and tables are included. A list of contact persons and related information are appended.