Multifamily Housing Preservation Pilot and Multifamily Housing Guaranteed Loan Notice of Loan-to-Cost Percentage Change for Option 3 (Continuous Guarantee)

The Rural Housing Service (RHS or the Agency) of the United States Department of Agriculture (USDA) issues this notice to implement two related actions. The first action is the Multifamily Housing (MFH) Preservation Pilot (the Pilot). This action has 3 parts: MFH Rural Rental Housing Loan (MFH Section 515) and MFH Section 538 Guaranteed Rural Rental Housing Program (MFH Section 538) programmatic variations involving transfers; MFH Section 515 transfers utilizing Low Income Housing Tax Credits (LIHTC); and Variations specific to MFH Section 538 for the First 200 Transactions. The transfers for above address three types of preservation related transfers: MFH Section 515 ownership transfers that do not fall within the Simple Transfer Pilot; MFH Section 515 ownership transfers involving Low Income Housing Tax Credits (LIHTC); and MFH Section 538 transactions regardless of whether a transfer is involved up to the first 200 guaranteed loans. In addition to both the MFH 515 and MFH 538 programmatic changes and transfer changes, the Agency includes a DSCR change for the MFH 538 program, among other variations to that program, for the first 200 guaranteed loans in the Pilot. The Agency will use the Pilot to determine if it can improve program delivery efficiency for transactions that facilitate preservation of the low-income housing units in rural America while maintaining appropriate risk management of the portfolio. While the Pilot is active, the Agency will evaluate the Pilot's progress and identify opportunities to improve regulations, remove regulatory barriers, and reduce duplicative application requirements. These specific actions are critical for preserving assets in the MFH portfolio, which are aging and face significant delays and regulatory hurdles for transfers that significantly impact the assets long-term viability and overall portfolio risk; not only to the Agency but especially to the Rural population who reside in these assets. Therefore, for all parties involved, the Agency takes immediate action to ensure the Agency, owners and residents do not continue to struggle with the weight of government regulations slowing preservation of affordable, decent, safe and sanitary rural rental housing. The second action is Multifamily Housing Guaranteed Loan Notice of Loan-to-Cost Percentage Change. This action addresses a change to the loan terms for the MFH Section 538 Guaranteed Rural Rental Housing Program (MFH Section 538) under Option 3 (Continuous Guarantee) only. This action is not a part of the Pilot. Specifically, this action changes the maximum loan-to-cost percentage for loans guaranteed under Option Three (Continuous Guarantee) from 70 percent to 80 percent. The Agency is aligning with other federal agencies and the market to ensure demand for the guaranteed loans used for preservation and production of affordable, decent, safe and sanitary rural rental housing. The official record describes this as a completed action.