usc 12 § 1715s
Treatment of mortgages covering tax credit projects (BANKS AND BANKING (12 U.S.C.))
Operative Text
For purposes of this section, the term “insured mortgage covering a tax credit project” means a mortgage insured under any provision of this subchapter that is executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any low-income housing tax credit pursuant to . In the case of an insured mortgage covering a tax credit project, the Secretary may not require the escrowing of equity provided by the sale of any low-income housing tax credits for the project pursuant to , or any other form of security, such as a letter of credit. In the case of an insured mortgage covering a tax credit project for which project the applicable tax credit allocating agency is causing to be performed periodic inspections in compliance with the requirements of , such project shall be exempt from requirements imposed by the Secretary regarding periodic inspections of the property by the mortgagee. To the extent that other compliance monitoring is being performed with respect to such a project by such an allocating agency pursuant to such section 42, the Secretary shall, to the extent that the Secretary determines such monitoring is sufficient to ensure compliance with any requirements established by the Secretary, accept such agency’s evidence of compliance for purposes of determining compliance with the Secretary’s requirements. The Secretary shall establish a pilot program to demonstrate the effectiveness of streamlining the review process, which shall include all applications for mortgage insurance under any provision of this subchapter for mortgages executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any low-income housing tax credit pursuant to . The Secretary shall issue instructions for implementing the pilot program under this subsection not later than the expiration of the 180-day period beginning upon . 1 Such pilot program shall provide for— the Secretary to appoint designated underwriters, who shall be responsible for reviewing such mortgage insurance applications and making determinations regarding the eligibility of such applications for such mortgage insurance in lieu of the processing functions regarding such applications that are otherwise performed by other employees of the Department of Housing and Urban Development; submission of applications for such mortgage insurance by mortgagees who have previously been expressly approved by the Secretary; and determinations regarding the eligibility of such applications for such mortgage insurance to be made by the chief underwriter pursuant to requirements prescribed by the Secretary, which shall include requiring submission of reports regarding applications of proposed mortgagees by third-party entities expressly approved by the chief underwriter.
Under 12 U.S.C. § 1715s, when a federally insured mortgage is connected to a multifamily housing project that uses low-income housing tax credits (LIHTCs), certain federal requirements are relaxed or redirected. Specifically, the Department of Housing and Urban Development (HUD) cannot require that LIHTC equity proceeds be held in escrow or secured by instruments like letters of credit. Additionally, if the state or local tax credit allocating agency is already conducting periodic inspections and compliance monitoring under the relevant tax credit rules, HUD must accept that oversight as sufficient rather than duplicating it with its own inspection mandates. The provision also directs HUD to establish a pilot program that streamlines the mortgage insurance review process for these tax credit projects by using designated underwriters and pre-approved mortgagees.
Plain English — not legal advice.
Owners and managers of multifamily properties financed through an FHA-insured mortgage tied to low-income housing tax credits should be aware that, under 12 U.S.C. § 1715s, HUD is prohibited from requiring escrow of LIHTC equity proceeds or demanding additional security such as a letter of credit for those funds. Operators whose projects are subject to periodic inspections by the applicable tax credit allocating agency generally satisfy HUD's inspection requirements through that agency's oversight, reducing duplicative compliance burdens. Those seeking mortgage insurance for new construction, rehabilitation, purchase, or refinancing of LIHTC projects may also benefit from the streamlined pilot program established under this section, which routes applications through designated underwriters and limits eligibility to mortgagees previously approved by the Secretary.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Residents of multifamily housing developments that carry both FHA-insured mortgages and low-income housing tax credits may find it useful to know that 12 U.S.C. § 1715s shapes how those projects are overseen at the federal level. Because the provision directs HUD to rely on the state or local tax credit allocating agency's inspections and compliance monitoring, tenants who have concerns about property conditions can look to both HUD and the relevant allocating agency as potential oversight bodies. Tenants who believe their building is not meeting applicable standards may consider contacting their local tenant-rights organization, reaching out to the allocating agency directly, or exploring complaint processes available through HUD to understand what avenues exist under this framework.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 13, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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