Along with various affiliates and partners, SP Investment Fund focuses its efforts on social impact and emerging technologies investments. SP Investment Fund and its affiliates have invested in projects that use a wide array of government subsidized affordable housing programs including Mark-to-Market, Project Based Section 8, low income housing tax credit, Community Development Block Grant, HOME, FHA Section 236, FHA Section 221(d)(3), FHA Section 221(d)(4), tax exempt bond financing and Flex Subsidy. One of these programs, the Mark-to-Market program was created by the Multifamily Assisted Housing Reform and Affordability Act (MAHRA) of 1997, in which the U.S. Department of Housing and Urban Development (HUD) authorized the Mark-to-Market initiative. Designed to preserve affordable housing for low income residents while also reducing federal monetary assistance, Mark-to-Market looks at HUD-insured multifamily rental projects and restructures mortgage payments if necessary. The Mark-to-Market program also ensures that a competent management team is in place so that restructured projects can be sustained long term. As part of the Mark-to-Market process, local housing authorities or agencies work with eligible properties to identify appropriate rental costs, any necessary improvements to the property, and if any financial restructuring is needed to make the operation feasible. As part of the process, the Project Based Section 8 contract is often adjusted downward so that rents are equal to market rents. The FHA mortgage is also extended with the current balance being amortized over the new term, often resulting in lower mortgage payments. If the property cannot afford its debt service payments, the FHA mortgage is typically divided into an A piece, that carries current payments and will be amortized over the new mortgage term, and B and C pieces that accrue interest at 1%, carry no fixed payments and instead are entitled to payments based on a percentage of cash flow with the remaining balance being owed at the time the first mortgage is due.
