Ginnie Mae announced that effective June 1, 2015, USDA Section 538 Multifamily loans with a maximum loan amount of 70% of total development costs will be eligible for pooling into Ginnie Mae mortgage-backed securities (MBS). This is an increase from the previously allowable maximum loan amount of 50% of the total development costs.
The Ginnie Mae Multifamily MBS Program enables lenders to reduce mortgage interest rates paid by property owners and developers of apartment buildings, hospitals, nursing homes, assisted living facilities and other types of housing. These lower interest rates provide the necessary incentive for many developers to construct new projects or substantially rehabilitate existing structures.
Under the Section 538 Guaranteed Rural Rental Housing Program (GRRHP), the USDA provides credit enhancements through government guarantees to encourage lenders to make new loans to multifamily developers for the construction and preservation of affordable rental properties for low-and moderate-income tenants in rural areas of the country. The USDA program provides loan guarantees up to 90 percent to construct or rehabilitate affordable rural multi-family rental housing. Since 2009, the program has helped rehabilitate or build over 14,000 housing units.
In FY 2014 the outstanding balance of Multifamily MBS guaranteed by Ginnie Mae increased to $87.9 billion, compared with $79.8 billion in FY 2013, helping to finance 1,476 apartment buildings, 14 hospitals, 355 nursing homes and 217 assisted living homes. Additional information about Ginnie Mae’s updated multifamily program can be found here.
