The U.S. Department of Housing and Urban Development funded fewer loans in the first quarter than in the period ending December 2021, according to an analysis by Trepp.
HUD funded 346 loans totaling $6.04 billion in the quarter ended March 31, down from the 404 loans totaling $8.92 billion it funded in the prior quarter. The agency’s fiscal year 2021, which ended in September, saw 1,578 multi-family loans funded with a total balance of $29.48 million, up 55% from fiscal year 2020 numbers. .
Trepp notes that HUD’s original volume last quarter lines up with the $15 billion and $16 billion that Freddie Mac and Fannie Mae created respectively during the same period. Greystone Funding was HUD’s most active lender in the past fiscal year, accounting for $11.28 billion of the agency’s total production volume. Greystone was followed by Dwight Funding and Berkadia.
Trepp’s research also shows that HUD’s average funded loan size has increased since 2019, and that 34% of its volume in the last fiscal year was against affordable housing.—compared to 37% in 2020 and 45% in 2019.
“While it may take time to get a HUD loan funded—it can take six months from application to closing—the agency offers some owners irresistible value,” writes Orest Mandzy of Trepp. “As a result, many HUD loan specialists have developed proprietary bridge loan platforms, through which they will fund short-term loans against properties as HUD applications are processed.”
He adds that HUD loans can also be supported and sized up to 85% of a property’s value (and more for those classified as affordable) without recourse, and they also offer “predictable” payment fees.
“Agency loans are ideal for long-term property holders as they fully amortize over their term, which is typically 35 or 40 years,” says Mandzy.
In fiscal year 2021, nearly 52% of HUD’s volume consisted of 223(f) loans, an increase of 73% from fiscal year 2020.