HUD Funds Fewer Apartment, Seniors Loans In Q1

The US Department of Housing and Urban Development funded fewer loans in the first quarter than in the period ending December 2021, according to a Trepp analysis.

HUD funded 346 loans totaling $6.04 billion in the quarter ended March 31, down from the 404 loans totaling $8.92 billion it funded in the previous quarter. The agency’s fiscal year 2021, which ended in September, saw 1,578 multifamily loans funded with a total balance of $29.48 million, up 55% from fiscal 2020 numbers. 

Trepp notes that the HUD origination volume last quarter aligns with the $15 billion and $16 billion Freddie Mac and Fannie Mae respectively originated during the same time. Greystone Funding was the most active lender during HUD’s latest fiscal year, accounting for $11.28 billion of the agency’s total production volume.  Greystone was followed by Dwight Funding and Berkadia.

Trepp research also shows that the average size of loans funded by HUD has increased since 2019, and that 34% of its volume in the last fiscal year was against affordable housing properties—down from 37% in 2020 and from 45% in 2019.

“While it can be time-consuming to get a HUD loan funded—it can take six months from application to closing—the agency offers certain property owners compelling value,” Trepp’s Orest Mandzy writes. “As a result, many HUD lending specialists have developed proprietary bridge-lending platforms, through which they’ll fund short-term loans against properties as HUD applications are processed.”

He adds that HUD loans can also be assumed and sized to as much as 85% of a property’s value (and higher for those categorized as affordable) on a non-recourse basis, and they also offer “predictable” payment fees.

“The agency’s loans are ideal for long-term holders of properties in that they amortize fully over their terms, which typically run 35 or 40 years,” Mandzy says.

In fiscal 2021, nearly 52% of HUD’s volume consisted of 223(f) loans, a 73% increase from fiscal 2020.