Section 223(f) Three Year Rule Waiver
December 12, 2008
HUD has recently approved a waiver of the three‐year rule in the Section 223(f) program in response to the lack of permanent financing options in the current real estate finance market. The letter contains what we believe will be the primary elements of the mortgagee letter being drafted at HUD to provide for field office waivers of the three‐year rule. While the mortgagee letter has not been finalized and the conditions may change from those outlined in this letter, mortgagees may want to screen potential applications on the basis of these conditions.
Of particular note is the requirement that the project must have attained sustaining occupancy for a period of three months immediately prior to the date that the application for Firm Commitment is submitted. It is our understanding that the second requirement regarding permanent conventional financing can be satisfied through evidence that the current lender is unwilling to extend the financing and has requested that the owner secure alternative financing as soon as possible.