HUD multifamily loans - other than slow processing, worthwhile?

[Christina L.]

I'm doing some research on multifamily lenders and I learned that HUD offers loans at rates in the 3.5% - 4.4% range for 30 years with a 40 year amortization schedule. Other than the fact that it can take months for them to process a loan, if you have the time to wait, anyone aware if there are any other drawbacks to HUD loans on stabilized MF assets?

[Eric Schleif]

HUD's 40 year amortizing loans are geared towards developers for new construction projects. I'm assuming your deal (as most others) would qualify for 35 year amortization. As others have stated, there is time lag to execute a closing, higher fees, and more headaches. @Johnny Wahba I've never heard of a max loan but they typically don't make sense for loans under $10 million. However, there are a few shops that specialize in smaller HUD transactions.

If you are looking for a HUD loan on an acquisition, then the way to go is to use a shop that can provide an acquisition bridge loan while simultaneously underwriting and submitting the deal for a HUD takeout execution. That way you can purchase the property in the standard 60-90 days and refi out to a HUD deal 6-9 months later.

It would be smart to compare this to agency debt. I would assume it may be more attractive than going the HUD route. Feel free to PM me if you'd like to discuss in further detail.