HUD FINAL RULE PROHIBITS REQUIRED ESCROWING OF TAX CREDIT EQUITY
The U.S. Department of Housing and Urban Development (HUD) released its final rule today on the prohibition of the escrowing of tax credit equity. The final rule, in accordance with a provision in the Housing and Economic Recovery Act of 2008, bars HUD from requiring the escrowing of equity from the sales of low-income housing tax credits (LIHTCs), historic tax credits (HTCs) and new markets tax credits (NMTCs) for HUD-insured mortgages. Mortgagors will now be able to deposit cash deemed by the Federal Housing Commissioner to be sufficient, when added to the proceeds of the insured mortgage, to assure completion of the project and to pay the initial service charge, carrying charges, and legal and organizational expenses incident to the construction of the project. Additionally, the tax credit equity need not be fully disbursed before the disbursement of mortgage proceeds.
Tune in to tomorrow’s Tax Credit Tuesday podcast to learn more.