The California Department of Housing and Community Development (HCD) finalized the application process for borrowers and sponsors who wish to request an interest rate reduction on an HCD loan prior to the close of permanent financing.

AB 2562 authorized HCD to reduce the interest rate on its loans for projects that meet certain conditions, including:

  • The HCD loan has not yet closed or the loan is being restructured under the Loan Portfolio Restructuring (LPR) program
  • The project utilizes low-income housing tax credits
  • The reduced rate is required to meet the true debt test or to enable syndication by preventing a negative capital account
  • The change in rate materially increases project feasibility and ensures the long-term affordability for the residents

Visit the respective funding-program webpage. Under Program Forms section, click on Loan Closing Documents, and look for the documents flagged as New! Look for the “Interest Rate Reduction Application Certification” and the “Interest Rate Reduction Sponsor Process” documents, which are available for the following funding programs:

Please contact LoanClosing@hcd.ca.gov with questions.