Staying ahead of policy change is critical when every basis point counts. X-Caliber’s HUD Insights breaks down key updates that could reshape the way you finance, plan, and execute your next multifamily or affordable housing project.

From FHA’s just-released proposal to level Mortgage Insurance Premiums (MIPs)  for all multifamily program categories, to new clarity on radon testing and fair housing regulations, this month’s newsletter delivers timely insight on federal shifts and what they mean for your bottom line.

Check out the latest HUD policy news below.

MBA: Green MIP Reduction to Be Rescinded

Last week the Department of Housing and Urban Development (HUD) announced their proposal to eliminate the Green Mortgage Insurance Premium (MIP) Reduction program and lower the MIPs .25 basis points across the board for all multifamily programs, including 223(f), 221(d)(4), 241(a), 223(a)(7).

This means you won’t have to meet ENERGY STAR requirements, which often increases building costs, to access loan savings. (However, if you’ve already earned the Green MIP Reduction, you must continue complying with the program.)

“Since nearly all borrowers have been taking advantage of the Green MIP, an overall reduction in the premium will add no risk to the FHA program,” says MBA Vice President of Commercial Real Estate Finance Policy Megan Booth. “Construction standards have been moving more green over the last decade, and the elimination of the program will simply save many properties from the fees associated with the certification process.”

The Trump administration has signaled a move toward embracing tax incentives for energy efficient property improvements, though the proposed federal spending bill (more on that below) puts many current incentives at risk, according to CNET.

Bottom line: You will now be able to get a lower MIP without incurring the additional costs of meeting federal energy efficiency standards.

Housing Advocates Race to Save Section 8, Affordability Programs

Affordable housing providers are pushing back on President Donald Trump’s “skinny budget” proposal, which includes $33 billion in HUD cuts. The proposal would essentially eliminate Section 8 and other federal housing voucher programs, turning them into state rental assistance block grants instead. The budget proposal puts a two-year cap on rental assistance funds for adults without disabilities, which some housing advocates call “untenable,” according to Affordable Housing Finance.

HUD Secretary Scott Turner said in a statement that the budget proposal “provides states and localities greater flexibility while thoughtfully consolidating, streamlining, and simplifying existing programs to serve the American people at the highest standard.” However, the recommendations could have “serious implications” for affordable housing projects, the MBA said in a recent update.

House and Senate lawmakers seem reluctant to make the changes proposed by the president. Turner was questioned by lawmakers on both sides of the aisle earlier in June about the capacity of states to manage all the programs included in the proposed grants and the reduction in funding provided.

On the bright side, the reconciliation bill passed by the House in May expands the Low-Income Housing Tax Credit (LIHTC) to boost production of affordable housing, particularly in rural areas. And the Senate version of the reconciliation bill would make the LIHTC provisions permanent, which is great news for multifamily borrowers.

Still, while issues like Medicare cuts slow down budget negotiations on Capitol Hill, as Bisnow reported, the MBA is working with federal housing agencies on alternative budget solutions to support affordable housing. The MBA said it is “encouraged by their receptiveness.”

Bottom line: Many people are working overtime to protect the affordable housing programs you rely on to serve your tenants. As a HUD-affiliated lender, X-Caliber will keep you updated on the latest developments at our LinkedIn page.

Jay Parsons: Why Is Rent Growth Backtracking Again?

We’ve teamed up with the renowned rental housing economist to bring you apartment insights that will move your business forward. In the June edition of Multifamily Market Update featuring Jay Parsons, X-Caliber’s new monthly feature, understand why year-over-year rent growth has backtracked in the last two months despite strong absorption and improving rental affordability. Click here for the complete update.

Pullback on AFHM Regulations Sparks Strong Debate

There may be less red tape to cut through if you want to participate in a federal rental assistance program.

HUD has proposed rescinding its Affirmative Fair Housing Marketing (AFHM) regulations, which require FHA housing providers to submit their fair housing marketing plans annually. The proposal follows an interim final rule HUD issued in March restoring the original intent of the Affirmatively Furthering Fair Housing (AFFH) mandate, which requires a “general commitment that grantees will take active steps to promote fair housing,” according to the Federal Register.

HUD is accepting public comments on the proposed rescission through July 3.

There are strong feelings on both sides of the debate. HUD Secretary Scott Turner vows the rule change helps cities that “drain their budgets to comply with the extreme and restrictive demands made up by the federal government,” while critics like the National Low-Income Housing Coalition say it amounts to “one more attack on fair housing.”

The MBA, which is committed to expanding fair and equitable access to credit, says it “agrees with HUD’s determination that the existing AFFH compliance procedures are extensive and burdensome.” However, the organization adds that “program participants should continue to affirmatively further fair housing as and to the extent required by the Fair Housing Act.”

Bottom line: You won’t have to continue documenting your efforts to promote fair housing, but as you know, the law remains central to everything you do.

Changes to Radon Testing Requirements Stave Off Project Delays

With renters outnumbering apartments nine to one nationwide, according to RentCafe data, the Federal Housing Finance Agency (FHFA) is aiming to speed up multifamily production by lowering radon testing requirements to reduce potential construction delays.

Since the FHFA rescinded its Biden-era radon policy in March, Fannie Mae and Freddie Mac have significantly changed their testing requirements for multifamily properties, Globe St. reports.

• Fannie Mae eliminated minimum radon testing requirements altogether and requires testing only when mandated by state or local law.
• Freddie Mac returned to pre-2022 policy, now requiring only 10% of residential ground-contact units to be tested rather than 25%. Additional testing for units on higher floors is no longer necessary.

The mortgage and housing industries have cautioned against national testing standards, which disregard local and regional radon patterns. The MBA has requested that the FHFA conduct a full analysis of radon testing protocols to determine the most cost-effective and least disruptive policies to protect resident health.

Bottom line: For now, relaxed federal radon testing requirements mean fewer threats to your project timelines, but more may be coming down the pike.

FFRMS Expected to Be Removed for Multifamily Properties

HUD is expected to remove the Federal Flood Risk Management Standard (FFRMS) for multifamily properties now that the Federal Emergency Management Agency (FEMA) is no longer enforcing it.

The FFRMS required federally funded buildings to be constructed outside high-risk flood zones, but developers will no longer have to account for the 500-year floodplain. That provides more options for project locations with fewer flood insurance and mitigation requirements for new construction.

The MBA says HUD will have to publish guidance and new Federal Register notices to formally rescind or halt the FFRMS order. The process is expected to start sometime this summer.

Bottom line: If your property is outside the 100-year floodplain, you won’t be strapped with extra flood insurance requirements.