New Issue Bond Program (NIBP) - Multifamily

The Department of Housing and Community Development (DHCD) has been working with Fannie Mae, Freddie Mac, and the U.S. Treasury to implement the New Issue Bond Program for calendar year 2010. DHCD received an allocation of $92 million under NIBP for multifamily rental development. Under NIBP, DHCD will provide a fixed interest rate in the mid-4% range for rental housing loans for 40 years. All loans must be insured and it is expected that mortgage insurance will generally be FHA-GNMA. DHCD will also offer the option of FHA Risk Share credit enhancement. NIBP loans may be combined with other DHCD Resources. ALL LOANS MUST CLOSE IN CALENDAR YEAR 2010.

Purpose

The Department of Housing and Community Development (DHCD) has been working with Fannie Mae, Freddie Mac, and the U.S. Treasury to implement the New Issue Bond Program (NIBP) for calendar year 2010. NIBP was designed by the Obama Administration to:

• Help state and local finance agencies (HFAs), like DHCD, to maintain the viability of HFA lending programs on a temporary basis by allowing HFAs to issue long-term debt that is purchased by Treasury;
• Support low mortgage rates to expand resources for low and middle income families to own or rent homes that are affordable over the long term.

Eligibility

NIBP is funded by tax-exempt bonds and therefore the eligibility and requirements for DHCD’s Multifamily Bond Program apply. Read details about the Multifamily Bond Program.

Availability of Funds

Approximately $90 million will be available for low-interest loans under the initiative. DHCD will set three bond issuance dates in 2010 – one in the first half of the year and two in the Fall. Exact dates will be posted as soon as further guidance is received from Fannie Mae, Freddie Mac, and the U.S. Treasury. ALL NIBP LOANS MUST CLOSE IN CALENDAR YEAR 2010

Loan Term

40 years, plus an interest only period of up to 24 months for new construction or substantial rehabilitation projects. Shorter terms are possible but the interest rate would remain the same.

Interest Rate

Under NIBP, DHCD will provide a fixed interest rate in the mid-4% range for NIBP rental housing loans as follows:

• 4.40% Mortgage Rate. Note: This rate does not include any costs of credit enhancement or mortgage insurance premium (MIP).
• 4.55% Mortgage Rate with FHA Risk Share mortgage insurance. Note: This rate does not include the required mortgage insurance premium (MIP) of 50 basis points.

Mortgage Insurance

All loans must be insured and it is expected that mortgage insurance will generally be FHA-GNMA or FHA Risk Share through DHCD. Other forms of mortgage insurance, including Fannie Mae or Freddie Mac, may be acceptable provided the loan is included in the NIBP Indenture. Stand alone issuances are not eligible for NIBP. Fannie Mae and Freddie Mac normally require a stand alone issuance so please consult your DUS lender before submitting an application.

Other DHCD Resources

NIBP loans may be combined with 4% Low Income Housing Tax Credits, as well as funding through the Maryland Housing Rehabilitation Program – Multifamily (MHRP-MF) and the Maryland Energy Efficiency and Housing Affordability (MEEHA) program. Rental Housing Funds awarded through the February 2010 Competition may also be used in conjunction with NIBP. Given the state of the tax credit market, applicants may request NIBP loans without 4% tax credits

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