HERBERT NEWMAN | HUD Whisperer
The U.S. Department of Housing and Urban Development, also known as HUD, was established in 1965 to develop national housing policies and programs. For some multifamily investors, just the mere whisper of HUD/FHA brings a strained, sour look on their face. But for Herb Newman, who has been investing in multifamily properties for over 40 years, HUD/FHA brings to his face a knowing smile and a look of satisfaction. In fact, you could refer to Newman as “The HUD Whisperer.”
Newman’s first exposure to HUD’s multifamily insurance programs dates as far back as 1973. After receiving his Juris Doctor from the University of Akron School of Law in 1965, Newman practiced law until 1973 when he was appointed director of Akron Metropolitan Housing Authority, AMHA. As the Director of AMHA, he was part of HUD’s transition team that pioneered project concepts that are now used nationwide. During the late 1970’s and early 1980’s, he helped write many of the laws now governing HUD/FHA financing and the development of housing. Newman devised the use of tax-free financing of subsidized housing by using revenue bonds sold under Federal Housing Regulation 811(b) which he partially authored. He also consulted with housing authorities nationwide.
Since Newman’s first foray into HUD/FHA multifamily insurance programs, he has acquired and developed market rate, affordable and senior multifamily housing projects. Newman’s company, Summit Management Services, Inc. has been in business for over 30 years. His acquisition company, Summit MultiCapital, LLC (SMC) is now in the fifth year of a national expansion program to acquire and develop Class A multifamily properties. SMC targets properties located in secondary and tertiary markets around the U.S., where individuals and families are moving for specific lifestyle attributes. Utilizing Newman’s background and knowledge, SMC is able to obtain favorable debt financing through HUD/FHA, Fannie Mae, Freddie Mac and other financial institutions.
Summit’s growth model has landed them in partnership with institutional investors, whereas for many years, the company’s investment partners were simply family and friends. To Newman’s surprise, many of the institutional investors Summit works with have never entertained HUD/FHA as a multifamily financing source. “We have a team of capable people who know how to get HUD/FHA loans done and most importantly closed,” says Newman. “Where else are you going to get 35 to 40 year, self-amortizing, fixed rate, non-recourse financing without having to stomach a yield maintenance prepayment penalty? Whether it’s a 223(f), 221(d)4, 223(a)(7) or a TPA assumption, 40 years of experience gets it done. Institutional investors have come to understand the great advantage HUD/FHA has to offer. They appreciate our decades of experience with HUD/FHA multifamily insurance programs.”
Summit still looks at every type of multifamily financing for every deal. However, when Newman whispers HUD to his institutional partners, they appreciate the fact that they’re not only investing with a partner who will generate respectable returns on equity and value appreciation, they also know that Newman’s HUD whisper is a huge value add on the debt side of the equation.