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HUD published notice “Changes in Certain Multifamily Housing and Health Care Facility Mortgage Insurance Premiums for Fiscal Year (FY) 2013” in the Federal Register. The notice announces that mortgage insurance premium (MIP) increases for certain multifamily housing and health care facility mortgages will be implemented in FY 2012 and FY 2013.
The revised MIPs will be effective for any firm commitments issued or reissued on or after October 1, 2012, with the exception of those transactions for which firm commitment applications were submitted prior to June 1, 2012. Firm Commitments for applications received prior to June 1, 2012, will still be subject to the current basis point MIP rates (FY 2012) instead of the FY 2013 basis point MIP rates, even if issued after October 1, 2012.
These changes will not apply to loans combined with low-income housing tax credits (LIHTCs), other affordable housing loans for HUD-assisted properties, or loans insured under FHA’s Risk Sharing programs. The term other affordable housing loans for HUD-assisted properties” includes those properties with an active project-based Section 8 contract covering any of its units.
The MIP for market-rate New Construction/ Substantial Rehabilitation loans under Sections 207, 213, 220, 221(d)(4), 231, 232, and 242 will be increased by 20 basis points, and Section 223(a)(7) loans will be increased by 5 basis points; with a 15 basis point increase for all other market-rate multifamily housing, health care facility, and hospital loans. Positive credit subsidy obligations will not be required in FY 2013 for loans under any of the active mortgage insurance programs for multifamily housing or health care facilities.
A copy of the notice may be found here: http://www.gpo.gov/fdsys/pkg/FR-2012-08-15/pdf/2012-20045.pdf
HUD originally proposed the MIP changes in an April 10, 2012 Federal Register Notice. The Department believes that the MIP increases will provide additional protection for the General Insurance and Special Risk Insurance (GI/SRI) fund, increase receipts to the Treasury, encourage private lending to return to the market, and price the MIPs appropriately to compensate for the Federal Housing Administration’s (FHA) risk.
The National Affordable Housing Management Association signed on to an industry letter opposing the proposed increases to the MIPs in the April 20, 2012 notice. The industry groups stated that the purpose of MIPs was not to increase receipts to the registry or adjust FHA’s pricing of credit risk relative to the market. The industry groups believed that higher MIPs will only add to property owners’ costs, thereby affecting rents.
A copy of the letter may be found here: http://www.nahma.org/member/New%20HUD%20Docs/MIP%20Final%20Industry%20Letter.pdf