The U.S. Department of Housing and Urban Development (HUD) on July 29 issued new guidance to further clarify and ease the use of FHA multifamily mortgage insurance for projects that utilize low-income housing tax credits or tax-exempt financing. The new guidance, in the form of a notice (H 09-09) to HUD staff and a mortgagee letter (2009-24) to FHA lenders, implement changes made by the Housing and Economic Recovery Act of 2008. The new guidance eliminates required HUD subsidy layering reviews for LIHTC or tax-exempt bond projects, and eliminates required HUD cost certifications for tax credit projects for certain FHA multifamily insurance programs (Section 213, 220, 221(d)(3), 221(d)(4), 231) if the loan-to-cost ratio is less than 80%. In addition, the guidance clarifies how much housing credit equity must be invested at the time of FHA initial endorsement. The guidance says this initial installment must be of an “appropriate” amount, and recommends that this be at least 20% of the total tax credit equity that will be available, but permits a lower percentage that is subject to HUD Headquarters approval. The guidance includes examples for computing the initial equity contribution and for determining the maximum mortgage amount. The new guidance build on a mortgagee letter issued last year that streamlined the processing of applications for FHA multifamily mortgage insurance for housing credit projects.