HUD Issues Guidance Regarding Master Lease Structures

By Caitlin Jones
December 30, 2009 1 min read

Tax Credit Advisor, December 2009: The U.S. Department of Housing and Urban Development (HUD) has issued a new mortgagee letter (2009-40) providing policies and procedures for standard approvals of FHA multifamily mortgage insurance applications for tax credit projects using a master lease structure.

The new guidance is the latest step by HUD to try to make it easier for developers to pair FHA-insured loans with federal tax credits, including for low-income housing.

The guidance permits the master lease structure for projects using various federal or state tax credits (e.g., historic rehabilitation, new markets, housing), but is limited to HUDÃ•s Section 221(d)(4), 220, 223(f), and 231 mortgage insurance programs.

Master tenant or credit pass-through lease structures, particularly popular for historic rehab and new markets credit projects, enable different investors to claim different credits (i.e., federal and state) to maximize tax benefits and credit pricing.

(Letter: http://www.hud.gov/offices/adm/hudclips/whatsnew)

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