The Mortgage Bankers Association (MBA) sent a letter Friday to the Department of Housing and Urban Development (HUD) with eight recommendations for how the agency can improve its multifamily mortgage insurance programs to better support the development and preservation of housing in Opportunity Zones.
The implementation of the recommendations would “reduce friction in FHA execution, align underwriting with the time-sensitive nature of Opportunity Zone capital, and encourage more production in communities where additional housing investment is urgently needed,” wrote MBA President and CEO Bob Broeksmit in his letter to HUD Secretary Scott Turner.
The MBA’s recommendations for Opportunity Zone transactions are as follows:
- Treat all Opportunity Zone properties similar to middle-income properties
- Expand commercial income and space flexibility for all 221(d)(4) Opportunity Zone transactions
- Create express lane processing for all Opportunity Zone transactions
- Eliminate the application of NEPA for FHA-insured transactions
- Eliminate or suspend Davis-Bacon requirements, including Opportunity Zone transactions
- Reduce or cap inspection fees for Opportunity Zone transactions
- Allow developer fees to be mortgageable for Opportunity Zone transactions
- Allow flexibility in the use of mortgage loan proceeds during construction for Opportunity Zone transactions
“Housing affordability and supply remain urgent national priorities, and the Opportunity Zones you have championed represent an important platform for attracting long-term private investment into communities that need additional housing,” Broeksmit wrote in his letter to Turner.
The MBA leader believes the recommendations “will reduce regulatory barriers, expedite processing, lower costs and increase the production of quality multifamily housing in Opportunity Zones.”
Opportunity Zones were created under the Tax Cuts and Jobs Act of 2017, a bill championed by Sen. Tim Scott, R-S.C., the chairman of the Senate Committee on Banking, Housing, and Urban Affairs. The zones are areas designated by state governors in economically distressed census tracts, intended to boost economic growth and job creation in low-income communities while providing tax benefits to investors.
Earlier this month, Scott celebrated the expansion and modernization of Opportunity Zones in his state, calling them “an innovative tool that empowers states to identify economically distressed communities and connect them with a powerful incentive to drive private investment where it’s needed most.”
