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Questions on FHA Financing

Processing of FHA Firm Applications under RAD

We are interested in the RAD program for public housing. If we refinance a property using Section 223f as part of the RAD transaction, what HUD office would process the Section 223f Firm Commitment application?

The RAD program has designated and trained a team of Transaction Managers who will process the RAD transactions, including 223(f) Firm Applications and FHA LIHTC pilot transactions. Once a CHAP is issued, the PHA will be assigned a HUD Transaction Manager who will also serve as the 223f FHA underwriter for the transaction. Transaction Managers are physically stationed at several different HUD offices.

Cash Out for Conversions Utilizing FHA Insurance

Is the cash out provision in the RAD Notice applicable for RAD conversions utilizing FHA insured financing?

The cash out provision in the RAD Notice at 1.4B(2)applies to RAD conversions using FHA-insured financing; but it does not supersede the FHA program limitations on cash-out for a 221(d)(4).

HUD Risk Share Closing Documents

A PHA is planning to use HUD Risk Share in their loan and bond closing. Do they need to modify their documents to include any RAD specific language, or is the Use Agreement sufficient? Has there been experience with other HUD Risk Share participants?

HUD Field Counsel will determine what, if any, documents need to be modified as part of the closing process for a RAD conversion utilizing the HFA-FHA Risk Share program. HUD Field Counsel is typically assigned when the RCC is issued, so the PHA or their counsel should inquire at that time.

223(f) Refinancing prior to RAD for Mod Rehab Property

We are working with the owner of a Mod Rehab property and we have been advised by others that the property could undergo a refinance now with the Section 223(f) mortgage insurance program and afterwards apply for RAD. Is that accurate? Can the property refinance now and then apply for RAD? Would this exempt the owner from additional engineering studies, financing plans, etc? Would there be anything special with the pending RAD application that we could address with the current refinance (such as additional testing, energy studies, etc)?

Yes, it is possible to refinance first and pursue RAD later. Your lender would have to be OK with the existing Mod Rehab contract, and you would want to be sure that your lender would also be OK with the future RAD conversion. Please also be aware that Mod Rehab eligibility is limited under RAD, and accordingly that there is a risk in waiting to apply for RAD. Refinancing prior to pursuing RAD would not change any of the otherwise applicable RAD requirements such as a PCA and a Financing Plan, so there probably will be savings available in transaction costs if the refinancing and RAD are pursued at the same time. If you do pursue refinancing now and RAD later, you might see if your lender would accept a RAD-compliant PCA. If so, your PCA provider might be able to update the PCA at a modest cost at the time you pursue RAD.

Timing of FHA Underwriter Assignment

When and how does an FHA representative get assigned to a RAD deal with an FHA component?

The designated FHA underwriter is typically not assigned until the FHA Firm Application has been submitted (which is at about the same time that the RAD Financing Plan is submitted). Prior to submitting the FHA Firm Application, the lender should request a concept call with the local MF Field Office to discuss the project 30-60 days prior to submission of the FHA Firm Application. The MF Field Office will schedule the call with the lender and typically invites the RAD TM as well. The MAP lender that the PHA is working with should be familiar with this process and should contact the local MF Field Office nearest to the project.


Our PHA has a large AMP that contains two buildings, one of which has a preference for the elderly and the other is for general occupancy. These two buildings are adjacent to one another and have historically been managed as one site. We wish to process both buildings as part of a single RAD transaction (to be owned as one single-asset entity) and wish to pursue an FHA-insured first mortgage. Under RAD, can an FHA transaction include both elderly and general occupancy populations?

Yes. FHA does have restrictions on combining elderly and family populations for unassisted properties that are developed through the Housing for Older Persons Act (HOPA). Generally, for HOPA properties, not more than 20% of the residents can be under 62 years of age. However, RAD transactions are not eligible for HOPA and, therefore, there is no FHA restriction in combining elderly and family populations as long as the project otherwise does not prohibit family members under the age of eighteen.