GAO Report Details HUD Risk-Sharing Mortgage Insurance Impact

The Government Accountability Office reports that HUD's Section 542(c) risk-sharing program underwrote over $12 billion (adjusted for inflation) in FHA-insured multifamily loans from fiscal years 2016 through 2025. The loans funded 776 projects expected to produce or preserve about 93,670 rental units, representing 7 percent of the total units financed by the risk-sharing program and three selected traditional HUD mortgage-insurance programs combined.

Under the traditional HUD programs, HUD-approved lenders prepare and submit loan applications and HUD itself approves projects. By contrast, the risk-sharing program delegates origination, underwriting, and servicing to state and local housing finance agencies, which also approve projects. HFAs may elect to share from 10 percent to 90 percent of any loss on a loan with HUD, while the traditional programs rely on uniform HUD standards and procedures.

Section 542 of the Housing and Community Development Act of 1992 directed FHA to test new forms of federal credit enhancement for multifamily loans. The risk-sharing program began as a pilot in 1994 and was made permanent in 2001. Participation requires HUD approval; as of July 2026, HUD had approved 37 HFAs to operate under the program.

GAO's review involved analysis of HUD data on FHA multifamily mortgage-insurance programs, examination of HUD regulations and program documents, and interviews with HUD officials, representatives of HFA associations, the Mortgage Bankers Association, and two lenders. The findings provide a benchmark for assessing the program's role in financing affordable rental housing.