HUD 223(f) Recourse

What is Rental Assistance Demonstration?

Rental Assistance Demonstration and the HUD 223(f) Loan Program

Rental assistance demonstration is a program which offers PHAs (public housing authorities) the power to “preserve and improve public housing properties” by addressing nationwide deferred maintenance backlogs. Certain HUD ‘legacy’ programs can enter into long-term contracts for financing improvements, including Rent Supplement, Rental Assistance Payment, and Section 8 Moderate Rehabilitation.


TO LEARN MORE ABOUT HUD 223F LOANS, FILL OUT THE FORM BELOW AND A HUD LENDING EXPERT WILL GET IN TOUCH. 

What are Replacement Reserves?

What are Replacement Reserves?

Replacement reserves consist of money earmarked for replacing building components and equipment which will wear out over the course of time. Replacement reserves are required for all properties funded with HUD multifamily loans, including those funded with HUD 223(f) loans.

What are Rental Assistance Properties?

Rental Assistance Properties and the HUD 223(f) Loan Program

Rental assistance properties are properties where low-income or very low-income tenants qualify for monthly rental assistance. HUD is involved with several rental assistance property programs, including low rent apartments, in which HUD “gives funds directly to apartment owners, who lower the rents they charge low-income tenants.”

HUD also offers the Section 8 program, in which low-income tenants receive vouchers that will pay for part or all of their rent. In return, Section 8 landlords receive a subsidy from HUD that will pay for the remaining portion of the rent. Properties financed with several types of HUD multifamily loans, including HUD 223(f) loans and HUD 221(d)(4) loans, are eligible to become Section 8 rental assistance properties.


TO LEARN MORE ABOUT HUD 223F LOANS, FILL OUT THE FORM BELOW AND A HUD LENDING EXPERT WILL GET IN TOUCH. 

What are Recourse Loans?

Recourse Loans and the HUD 223(f) Loan Program

If a loan is recourse and the borrower defaults (fails to repay the loan), the lender can seize both the collateral used to secure the loan and the borrower’s assets which are not used as collateral. Depending on how a loan is structured, this sometimes means that a lender can seize a borrower’s personal assets. Fortunately for borrowers, HUD 223(f) loans are non-recourse. This means that the lender can only seize a borrower’s collateral in the case of default, and cannot attempt to go after their other assets.

However, most HUD 223(f) loan agreements do contain “bad boy carve-outs,” which means that a borrower can go after a borrower’s non-collateral assets, but only if the borrower has committed certain bad acts, such as financial fraud or embezzlement.


TO LEARN MORE ABOUT HUD 223F LOANS, FILL OUT THE FORM BELOW AND A HUD LENDING EXPERT WILL GET IN TOUCH.