FHA Mortgage Insurance for Older, Declining Areas

Mortgage insurance to purchase or rehabilitate housing in older, declining urban areas.

In consideration of the need for adequate housing for low- and moderate-income families, HUD insures lenders against loss on mortgage loans to finance the purchase, rehabilitation, or construction of housing in older, declining, but still viable urban areas where conditions are such that normal requirements for mortgage insurance cannot be met. Properties must be in a reasonably viable neighborhood and acceptable risk under the mortgage insurance regulations. The terms of the loans vary according to the HUD/FHA program under which the mortgages are insured. HUD determines if the loan should be insured pursuant to Section 223(e) and become an obligation of the Special Risk Insurance Fund. This allows HUD to more effectively manage the greater expected risk in these loans. The insurance premium is 0.5 percent per year on the outstanding loan balance.
Applicant Eligibility:Home or project owners ineligible for FHA mortgage insurance because property is located in an older, declining urban area.
Legal Authority: Section 223(e) of the National Housing Act (12 U.S.C. 1715n(e)). Regulations are at 24 CFR 203.43a.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/223e--df.cfm
Current Status: Active.