Twenty lenders have been approved to take part in the Federal Housing Administration’s (FHA’s) Low-Income Housing Tax Credit Pilot Program.

The program aims to speed up the processing time for FHA-backed deals that use housing tax credits. In the past, affordable housing developers have had difficulty using the FHA because they faced tight deadlines under the tax credit program and couldn’t wait for the FHA’s slow turnaround time.  The goal will be to close loans within 90 to 120 days of submission.

“First, we’re looking forward to the simplification of the FHA loan application process for substantial rehab deals with tax credits,” said Tracy Peters, senior managing director at Red Mortgage Capital, one of the participating lenders. “Second, we are looking forward to the reduction in processing time to better match the tax credit deadlines and time constraints.”

A reduction in the “all-in” borrowing costs could also be realized because of low interest rates and savings in processing, he says.

Lenders have already begun talking to developers about potential deals even though some program parameters were being discussed at the start of May.

Peters estimated that the first deals could close this fall. Others agreed.

"Given the Department of Housing and Urban Development’s (HUD’s) commitment and Oak Grove Capital’s customers’ need for streamlined underwriting, processing, and closing of transactions, we believe that HUD will be able to close transactions under the pilot program before the end of the year,” said Brian Kelleher, managing director of Oak Grove’s FHA lending group.

Oak Grove Capital took application of its first transaction under the program this past week.

 The pilot is starting at four HUD hub offices – Boston, Chicago, Detroit, and Los Angeles.

 As of May 1, the approved lenders are:

  • 1. P/R Mortgage & Investment Corp.
  • 2. Red Mortgage Capital, LLC
  • 3. Prudential Huntoon Paige Associates, LLC
  • 4. Draper and Kramer Commercial Mortgage Co.
  • 5. Love Funding
  • 6. St. James Capital, LLC
  • 7. Developers Mortgage Corp.
  • 8. CW Capital, LLC
  • 9. Enterprise Community Investment, Inc.
  • 10. Rockport Mortgage Corp.
  • 11. Wells Fargo Multifamily Capital
  • 12. Gershman Mortgage
  • 13. Oak Grove Capital
  • 14. Lancaster Pollard Mortgage Co.
  • 15. Oppenheimer Multifamily Housing & Healthcare Finance Corp.
  • 16. PNC Real Estate
  • 17. AGM Financial Services, Inc.
  • 18. Forest City Capital Corp.
  • 19. CBRE HMF, Inc.
  • 20. Berkadia Commercial Mortgage, LLC

HUD said it plans to update the list during later phases.