On Aug. 6, HUD proposed rule on disbursement of mortgage proceeds.
HUD published proposed rule on the disbursement of multifamily mortgage proceeds.
Proposed Rule
Added exception to 24 CFR 200.54(b) that funds provided by mortgagor must be disbursed in full before the disbursement of any proceeds from insured mortgage.
Would permit mortgagees, where funds provided by mortgagor are not fully disbursed with initial advance of insured mortgage proceeds, to disburse up to 1% of mortgage.
Before requiring that the funds provided by mortgagor be disbursed in full.
Allow mortgagee disburse mortgage proceeds at time mortgage is initially endorsed for insurance up to a maximum of 1 percent of the initially endorsed mortgage amount.
Alternatively, disburse mortgage proceeds in any amount, monthly basis, consecutive or not, up to maximum 1% of initially endorsed amount, until funds fully disbursed.
Proposal Impact
Allow mortgagees disburse mortgagor-provided funds for project-related expenses proceeds from insured mortgage at the time the mortgage is initially endorsed.
Where mortgagor-provided funds not fully disbursed with initial advance of proceeds.
Mortgagees can pool mortgage into Ginnie Mae guaranteed mortgage-backed security (MBS) even when mortgagor-provided funds not fully disbursed with initial advance.
Help ensure that interest rates for FHA-insured mortgages remain competitive and ensure the liquidity of FHA-insured mortgages on the secondary mortgage market.
Consultation
Comments on proposed rule amendments are due by Oct. 7, 2024.
Dec. 2024 HUD Final Rule
On Dec. 13, 2024, HUD published final rule on mortgage proceeds in federal register.
Only minor and non-substantive revisions were made to the proposed rule following public comments, 24 CFR 200.54(b) exception to keep mortgage products competitive.
The final rule becomes effective on Jan. 13, 2025.
