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Multi-Family Bond Program (MBP)

Purpose of Program

The purpose of the Multi-Family Bond Program (MBP) is to increase the construction and rehabilitation of multi-family rental housing for families with limited incomes. Tax-exempt and taxable bonds and notes provide below-market and market rate construction and permanent financing. Taxable bonds provide market rate construction and permanent financing to leverage federal Low-Income Housing Tax Credits, and to finance projects and activities which are ineligible for tax-exempt bonds.

Eligible Types of Housing

Rental housing financed through the program may be new construction, acquisition, and rehabilitation of existing housing, and must contain a minimum of five units. Loans may be provided to refinance existing high interest rate private loans if the refinance is in conjunction with rehabilitation of the housing. Projects using tax-exempt bond financing must contain complete independent dwelling units. Single-room occupancy units (SRO's) and shared housing may be financed only with taxable bonds or 501(c)(3) bonds if owned by an eligible nonprofit corporation. Projects financed with tax-exempt bonds must comply with the Maryland qualified Allocation Plan in order to receive unallocated 4% Low Income Housing Tax Credits.

Eligible Applicants

For-profit and nonprofit developers may apply for Multi-Family Bond loans.

Eligible Residents

A sponsor of a project funded with tax-exempt bonds has a choice of making 20 percent of the units available to households earning 50 percent or less of the area median income, or making 40 percent of the units available to households earning 60 percent or less of the area median income. In addition, a total of 51 percent of the units must be occupied by limited-income families whose annual income does not exceed 85 percent of the statewide median income, which is adjusted for family size. For projects funded with taxable bonds, 20 percent of the units must be occupied by families whose annual income does not exceed 85 percent of the statewide median income.

Loan Terms

Interest rates are based upon CDA's bond rate. Interest rates for tax-exempt bonds are generally about 1.5 to 2.0 percentage points below market rates, and for taxable bonds, they are generally 1.5 percent above 30-year Treasury bonds. Loan terms are generally 30 years. A first lien position is required for all loans. All loans funded with tax-exempt bonds must comply with federal requirements established for tax-exempt revenue bonds.

Local Government Involvement

Local governments must formally approve the development and the MBP loan.

Mortgage Insurance

All loans must be insured by FHA, FNMA, or the Maryland Housing Fund (MHF) , or have other forms of credit enhancement acceptable to the program. CDA is a participant in the FHA/HFA Risk Sharing Program which delegates insurance underwriting to states. CDA also has been delegated the authority to underwrite MHF insurance. CDA is a FNMA prior approval multi-family lender/servicer.

For More Information, Contact:

Housing Development Programs
Community Development Administration
Maryland Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032-2023
rentalhousing@dhcd.state.md.us
410-514-7446
Toll Free (Maryland Only): 800-543-4505

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