Today, the U.S. Department of Housing and Urban Development and the U.S. Department of the Treasury announced new actions to provide more interest rate certainty for state and local Housing Finance Agencies (HFAs) that use the Federal Housing Administration's (FHA) risk sharing initiative with the Federal Financing Bank to finance new construction of affordable housing.

FHA and the Federal Financing Bank will implement a floor and a cap, called an interest rate “collar,” on the benchmark Treasury rate used to calculate the all-in rate provided to Housing Finance Agencies. This update to the Section 542(c) Housing Finance Agency Risk-Sharing Initiative will make it easier to use the program, thereby increasing the number of new, affordable multifamily properties that can be developed using risk-sharing program financing.

See the Press Release and the Housing Notice for additional detail.