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New Notice and Mortgage Letters Related FHA Multifamily Underwriting and Insurance

HUD has released Notice H 2012-07/Mortgagee Letter 2012-9 “Annual Base City High Cost Percentage and High Cost Area Revisions for 2012” and Mortgagee Letter 2012-8 “Policy Regarding Interest Rate Swap Termination Fees Associated with Debt to be Refinanced in Connection with Healthcare and Multifamily Mortgage Insurance Applications.”


In Notice H 2012-07/Mortgagee Letter 2012-9, HUD has reviewed the Cost Percentages (HCP) for the Underwriting Technical Direction for FHA Project Mortgage Insurance. Each Base City HCP has been recalculated based on Marshall & Swift construction data. The results are reflected in the attached list of authorized Base City HCPs, effective January 1, 2012.


In Mortgagee Letter 2012-8, HUD sets forth its policy in defining the indebtedness eligible for refinancing in connection with healthcare (Sections 232 and 242) projects and in connection with multifamily projects to include, under certain circumstances, interest rate swap termination fees. It applies to debt to be refinanced in connection with Section 223(f), substantial rehabilitation, or replacement facility projects. HUD states that the new policy will benefit prospective mortgagors who meet all of the qualifications of the healthcare and multifamily mortgage insurance program(s) under which they apply, and who may wish to refinance interest rate swap agreements they entered into before January 1, 2009, which were integrated into the original financing.


A copy of HUD’s Notice H 2012-07/Mortgagee Letter 2012-9 may be found here:


A copy of HUD’s Mortgagee Letter 2012-8 may be found here:

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