U.S. Department of Housing and Urban Development

H O U S I N G

Special Attention of: Notice H 92-50 (HUD)

All Regional Administrators,

Regional Housing Directors, Issued: June 26, 1992

Office Managers, Housing Expires: June 30, 1993

Development Directors, and

Economic Market Analysis Staff Cross References:

Subject: Extension of Notice H 90-42 and Notice H 91-46, Field

Office Review of Market Need for Multifamily Insurance

and Coinsurance

The expiration date of Notice H 90-42, issued June 29, 1990,

and Notice H 91-46, issued June 4, 1991, is extended to June 30, 1993.

Assistant Secretary for Housing-

Federal Housing Commissioner

HMIT: Distribution: W-3-1, W-2(H), W-3(H)(ZAOO)(OGC), W-4(H)(OGC), R-1,
R-2,

R-3, R-3-1(H)(RC), R-3-2, R-3-3, R-6, R-6-1, R-6-2, R-7,

R-7-1, R-7-2, R-8, R-8-1

U.S. Department of Housing and Urban Development

HOUSING

Special Attention of: Notice H 91-46 (HUD)

All Regional Administrators,

Regional Housing Directors, Issued: 6/4/91

Office Managers, Expires: 6/30/91

Housing Development Directors, and

Economic Market Analysis Staff Cross References:

Subject: Extension of Notice H 90-42 (HUD), Field Office Review of

Market Need for Multifamily Insurance and Coinsurance

Notice H 90-42 (HUD), issued June 29, 1990, is extended to

June 30, 1992.

The Present expiration date is June 30, 1991.

Assistant Secretary for Housing-

Federal Housing Commissioner

HMIT: Distribution: W-3-1, W-2(H), W-3(H)(ZAOO)(OGC), W-4 (H)(OGC),

R-1, R-2, R-3, R-3-1 (H)(RC), R-3-2, R-3-3, R-6, R-6-1, R-6-2,

R-7, R-7-1, R-7-2, R-8, R-8-1

U. S. Department of Housing and Urban Development

H O U S I N G

Special Attention of:

All Regional Administrators, Notice H 90-42 (HUD)

Regional Housing Directors,

Office Managers, Issued: June 29, 1990

Housing Development Directors, and Expires: June 30, 1991

Economic Market Analysis Staff

Cross References:

Subject: Field Office Review of Market Need for Multifamily

Insurance and Coinsurance

This is to advise that effective on the date of this Notice,

Field Offices are to notify sponsors of multifamily mortgage

insurance cases that the initial market needs analysis conducted by

HUD is subject to review on an annual basis.

Full Insurance

In the case of full insurance applications for multifamily

projects, the Field office, as part of its initial analysis of the

project, will make a market needs analysis. If the number or type

of units for the market to be served is not appropriate, the

application will not go forward. once an application does move

forward and a commitment is issued, HUD would be unable to

terminate that commitment during the life of the commitment,

assuming that all requirements and special conditions of the

commitment have been met. It is reasonable to expect that it may

take up to 1 year after the issuance of a conditional commitment

before start of construction. Therefore, if a Field Office is

about to issue a conditional commitment where more than 6 months

has elapsed since the market review, the market needs assessment

must be reviewed and approved prior to the issuance of the

commitment. Any conditional commitment must contain a condition

which states that if the project has not proceeded to initial

endorsement, in the case of project involving insurance of

advances, or start of construction, if the project involves

insurance upon completion, within 1 year from the date of the

issuance of the original conditional commitment, the market needs

analysis must be reviewed and approved again by HUD.

HMIT: Distribution: W-3-1, W-2(H), W-3(H)(ZAOO)(OGC), W-4(H)(OGC),

R-1, R-2, R-3, R-3-1(H)(RC), R-3-2, R-3-3, R-6, R-6-1, R-6-2,

R-7, R-7-1, R-7-2, R-8, R-8-1

2

The same process will be followed in the case of a firm

commitment where no conditional commitment has been issued.

Immediately prior to issuing the commitment, the Field office will

review the market needs analysis again. If the review is

affirmative, the firm commitment will have a condition making it

clear that the market needs analysis is subject to review and

approval in 1 year from the date of the firm commitment if the

project has not proceeded to initial endorsement, in insurance of

advances cases, or construction start, in insurance upon completion

cases. Again, assuming compliance with all requirements and

special conditions of the commitment, the commitment may not be

terminated. Accordingly, any request for extension of a firm

commitment or reopening of an expired commitment where one year has

passed since the original issuance date of the firm commitment, may

only be approved after review and approval of the market needs

analysis.

Coinsurance of Multifamily Projects

In the case of coinsured projects, where applicable, HUD is

responsible for reviewing and approving these projects to avoid

insuring additional units where there is insufficient demand or

where they would adversely affect existing projects. This

requirement exists for all new construction and substantial

rehabilitation cases and any existing project where the tenant user

group will significantly change. This approval will be good for 1

year from the date of its issuance. At the end of 1 year, HUD will

review the earlier approval. HUD will either again approve the

project from a market needs standpoint or withdraw the former

approval as conditions warrant. Under this circumstance,

coinsuring lenders shall not issue, modify, amend, reopen or extend

a commitment until they have requested and received approval from

the HUD Field office with respect to the market impact.

If a coinsuring lender intends to issue a conditional or firm

commitment and the market impact analysis is more than 6 months

old, at its option, the coinsuring lender may request a review of

the analysis by the Field office prior to the issuance of the

commitment to assure that the developer has sufficient time to

finalize its plans and specifications and proceed to construction

start. Regardless, any commitment issued by the coinsuring lender

must include the condition that if the project does not reach

initial endorsement, in the case of insurance of advances, or

construction start, in the case of insurance upon completion,

within 1 year from the date of the market needs analysis approval,

the market needs analysis must be reviewed and approved again by

HUD.

See attached Coinsuring Lender Letter No.90-7, dated June 29,

1990\.

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Applicability

Firm commitments outstanding prior to the date of this Notice

will remain valid during their existing approval period. Any

extensions or reopenings of expired commitments will be subject to

review and approval by the Field office with respect to the market

needs analysis.

Outstanding conditional commitments will not be subject to

such a review so long as the project moves to initial endorsement,

in projects involving insurance of advances, or construction start,

in projects involving insurance upon completion, within 6 months of

the date of this Notice or 1 year after the initial market approval

by HUD, whichever is longer.

C. Austin Fitts, Assistant Secretary

for Housing - Federal Housing

Commissioner

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, D.C. 20410-8000

JUNE 29, 1990

OFFICE OF THE ASSISTANT SECRETARY FOR

HOUSING-FEDERAL HOUSING COMMISSIONER

Coinsuring Lender Letter No. 90-7

TO ALL COINSURING LENDERS

SUBJECT: Section 221(d) and Section 223(f) Coinsurance

Market/Submarket Reviews

Enclosed is Notice H 90 -42 to all HUD Field offices from the

undersigned, dated June 29 , 1990, regarding market needs analyses

performed by Field offices for fully insured and coinsured

multifamily housing projects. These instructions amend Coinsuring

Lender Letter No. 88-21 on this subject.

Sincerely,

C. Austin Fitts

Assistant Secretary for Housing-

Federal Housing Commissioner