Changes in Certain Multifamily Mortgage Insurance Premiums, 51538-51540 [05-17242]

Download as PDF 51538 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–4679–N–10; HUD–2005– 0018] Changes in Certain Multifamily Mortgage Insurance Premiums Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD. ACTION: Notice. AGENCY: SUMMARY: In accordance with HUD regulations, this notice announces the changes of the mortgage insurance premiums (MIP) for the following Federal Housing Administration (FHA) multifamily mortgage insurance programs whose commitments will be issued or reissued in Fiscal Year (FY) 2006: • All sections of the National Housing Act where the mortgagor equity is produced from the proceeds of the sale of low-income housing tax credits (LIHTC): The MIP is reduced to 45 basis points. • Section 207/223(f) refinance or purchase of apartments: The MIP is reduced to 45 basis points. • Section 223(a)(7) refinance of FHA insured apartment mortgages: The MIP is reduced to 45 basis points. Under the Department of Housing and Urban Development Reform Act of 1989, Pub. L. 101–235 (approved December 15, 1989) and HUD’s implementing instructions, a sponsor is required to submit a certification regarding governmental assistance, including any low-income housing tax credits, with all mortgage insurance applications. DATES: Comment Due Date: September 29, 2005. ADDRESSES: Interested persons are invited to submit comments regarding this notice to the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410–0500. Interested persons may also submit comments electronically through either: • The Federal eRulemaking Portal at: www.regulations.gov; or • The HUD electronic website at: www.epa.gov/feddocket. Follow the link entitled ‘‘View Open HUD Dockets.’’ Commenters should follow the instructions provided on that site to submit comments electronically. VerDate Aug<18>2005 16:28 Aug 29, 2005 Jkt 205001 Facsimile (FAX) comments are not acceptable. In all cases, communications must refer to the docket number and title. All comments and communications submitted will be available, without revision, for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Copies are also available for inspection and downloading at www.epa.gov/feddocket. FOR FURTHER INFORMATION CONTACT: Michael McCullough, Director, Office of Multifamily Development, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410–8000, (202) 708–1142 (this is not a toll-free number). Hearing- or speech-impaired individuals may access these numbers through TTY by calling the Federal Information Relay Service at (800) 877–8339 (this is a toll-free number). SUPPLEMENTARY INFORMATION: Introduction HUD’s regulations at 24 CFR 207.252, 207.252a, and 207.254 provide that instead of setting the MIP at one specific rate for all programs, the Secretary is permitted to change an MIP program by program within the full range of HUD’s statutory authority of one fourth of one percent to one percent of the outstanding mortgage principal per annum through a notice, as provided in section 203(c)(1) of the National Housing Act (the Act) (12 U.S.C. 1709(c)(1)). The rule states that HUD will provide a 30-day period for public comment on notices changing MIPs in multifamily insured housing programs. Pursuant to this comment procedure, this notice announces changes from FY 2005 in the MIP for programs authorized under the National Housing Act. The effective date for these changes is proposed to be October 1, 2005. The MIP rate is to be changed to 45 basis points for the following programs where the mortgagor’s equity is being produced from the proceeds of the sale of Low Income Housing Tax Credits (LIHTCs): sections 221(d)(4), 221(d)(3), 207, 220, 231, 232, 241(a). Section 207/ 223(f) refinance or purchase of apartments will be lowered from 50 to 45 basis points; and section 223(a)(7) refinance of FHA insured apartment mortgages has been lowered from 50 to 45 basis points. The MIP rate for section PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 232 new construction or substantial rehabilitation of Health Care Facilities and section 241(a) Health Care Improvements and Additions will remain unchanged at 57 basis points. The MIP rate for sections 207, 213, 220, 231 without LIHTC, and 234(d), 242 and Title XI of the National Housing Act will remain unchanged at 50 basis points. The MIP rate for Refinancing of Health Care Facilities under section 232/223(a)(7) and 232/223(f) will remain at 50 basis points. The MIP rate for the following programs without lowincome housing tax credits will also remain at 80 basis points: section 221(d)(3) for Nonprofit and Cooperatives for New Construction or Rehabilitation, section 223(d) for Operating Loss Loans for apartments and health care facilities, and section 241(a) for improvements and additions for apartments. Loans under section 221(d)(3) without LIHTC, section 241(a) for supplemental loans for additions or improvements to existing apartments without LIHTC, and section 223(d) for operating loss loans will require a credit subsidy obligation in fiscal year 2006. Only nonprofit and nonprofit cooperative mortgagors can obtain a 100 percent mortgage under section 221(d)(3). The nonprofits cannot be under the control or influence of profit-motivated entities and continue to require a HUD Headquarters approval prior to issuance of the firm commitment. Premiums for risk sharing applications under sections 542(b) and 542(c) of the Housing and Community Development Act of 1992 will be reduced from 50 basis points to 45 basis points for those projects where lowincome housing tax credits are part of the project financing. This will require a revision to the section 542(c) regulations at 24 CFR 266.604 and renegotiation of section 542(b) agreements. Until the regulation change is effective and the section 542(b) agreements are modified, risk sharing premiums remain at 50 basis points for risk sharing projects with or without low-income housing tax credits. The mortgage insurance premiums to be in effect for FHA firm commitments issued, amended, or reissued in FY 2006 are shown in the table below: E:\FR\FM\30AUN2.SGM 30AUN2 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices 51539 FISCAL YEAR 2006 MIP RATES [Multifamily Loan program] Basis points Loan program 207 Multifamily Housing NC/SR ................................................................................................................................................................ 207 Multifamily Housing NC/SR with LIHTC ............................................................................................................................................ 207 Manufactured Home Parks ................................................................................................................................................................ 207 Manufactured Home Parks with LIHTC ............................................................................................................................................. 213 Cooperatives ...................................................................................................................................................................................... 221(d)(3) Nonprofit/Cooperative mortgagor .............................................................................................................................................. 221(d)(3) Limited dividend with LIHTC ..................................................................................................................................................... 221(d)(4) NC/SR with or without LIHTC ................................................................................................................................................... 232 NC/SR Health Care Facilities ............................................................................................................................................................ 232 NC/SR—Assisted Living Facilities with LIHTC .................................................................................................................................. 220 Urban Renewal Housing with LIHTC ................................................................................................................................................. 220 Urban Renewal Housing without LIHTC ............................................................................................................................................ 231 Elderly Housing .................................................................................................................................................................................. 231 Elderly Housing with LIHTC ............................................................................................................................................................... 207/223(f) Refinance or Purchase for Apartments with or without LIHTC ............................................................................................... 232/223(f) Refinance for Health Care Facilities without LIHTC ............................................................................................................... 232/223(f) Refinance for Health Care Facilities with LIHTC .................................................................................................................... 223(a)(7) Refinance of Apartments with or without LIHTC ...................................................................................................................... 223(a)(7) Refinance of Health Care Facilities without LIHTC .................................................................................................................. 223(a)(7) Refinance of Health Care Facilities with LIHTC ....................................................................................................................... 223d Operating loss loan for Apartments ................................................................................................................................................. 223d Operating loss loan for Health Care Facilities ................................................................................................................................. 241(a) Improvements/additions for Apartments/coop ............................................................................................................................... 241(a) Improvements/additions for Apartments/coop with LIHTC ............................................................................................................ 241(a) Improvements/additions for Health Care Facilities without LIHTC ............................................................................................... 241(a) Improvements/additions for Health Care Facilities with LIHTC .................................................................................................... 242 Hospitals ............................................................................................................................................................................................. Title XI—Group Practice .............................................................................................................................................................................. 50 45 50 45 50 80 45 45 57 45 45 50 50 45 * 45 * 50 * 45 45 50 45 80 80 80 45 57 45 50 50 * The first year MIP for these programs will remain at 100 basis points. Applicable Mortgage Insurance Premium Procedures The MIP regulations are found in 24 CFR part 207. This notice is published in accordance with the procedures stated in 24 CFR 207.252, 207.252(a), and 207.254. Transition Guidelines A. General If a firm commitment has been issued at a higher MIP and FHA has not initially endorsed the note, the lender may request the field office to reprocess the commitment at the lower MIP and reissue the commitment on or after the October 1, 2005 effective date. B. Extension of Outstanding Firm Commitments FHA may extend outstanding firm commitments when the Hub/Program Center determines that the underwriting conclusions (rents, expenses, construction costs, mortgage amount and case required to close) are still valid in accordance with Mortgagee Letter 03– 21, ‘‘FHA Policies for Controlling Multifamily Firm Commitments and Credit Subsidy,’’ dated December 3, 2003. VerDate Aug<18>2005 16:28 Aug 29, 2005 Jkt 205001 C. Reprocessing of Outstanding Firm Commitments FHA will consider requests from mortgagees to reprocess outstanding firm commitments at the lower mortgage insurance premium once the new premiums become effective on October 1, 2005: 1. Outstanding commitments with initial 60-day expiration dates on or after the effective date of this MIP notice. • FHA Multifamily HUD Hub/ Program Center staff will simply reprocess these cases to reflect the impact of the lower MIP and reissue commitments with a new date. 2. Outstanding commitments with initial expiration dates prior to the effective date of this MIP notice which have pending extension requests or have had extensions granted by FHA beyond the initial 60-day period of the commitment. • These cases will require more extensive reprocessing by FHA staff. Reprocessing will include an updated FHA field staff analysis and review of rents, expenses and construction/ rehabilitation costs, particularly considering any changes in Davis-Bacon wage rates on new/substantial cases and cash required to close. An updated appraisal and other exhibits may be PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 required from the mortgagee depending on the age of the appraisal and the age of the commitment (See Mortgagee Letter 03–21) . If reprocessing results in favorable underwriting conclusions, Hub/Program Center staff will reissue commitments with a new date at the new MIP. D. Reopening of Expired Firm Commitments FHA will consider mortgagee’s requests, which may be either updated traditional application processing (TAP) firm commitment applications or updated multifamily accelerated processing (MAP) applications with updated exhibits, to reopen expired 50 basis points commitments on or after October 1, 2005, provided that the reopening requests are received within 90 days of the expiration of the commitments and include the $.50 per thousand of requested mortgage reopening fee. Reopening requests will be reprocessed by FHA field staff under the instructions in paragraph C.2 above and Mortgagee Letter 03–21. After expiration of the 90-day reopening period, mortgagees are required to submit new applications with the $3 per thousand application fee. E:\FR\FM\30AUN2.SGM 30AUN2 51540 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices Credit Subsidy A credit subsidy obligation is required for the three sections of the Act listed below. If the mortgagor’s equity is produced from LIHTC for sections 221(d)(3) and 241(a), a credit subsidy obligation will not be required. VerDate Aug<18>2005 16:28 Aug 29, 2005 Jkt 205001 • Section 221(d)(3) for new construction or substantial rehabilitation • Section 223(d) for operating loss loans for both apartments and health care facilities • Section 241(a) for supplemental loans for additions or improvements for apartments only. PO 00000 Frm 00004 Fmt 4701 Sfmt 4703 Dated: August 18, 2005. Brian D. Montgomery, Assistant Secretary for Housing—Federal Housing Commissioner. [FR Doc. 05–17242 Filed 8–29–05; 8:45 am] BILLING CODE 4210–27–P E:\FR\FM\30AUN2.SGM 30AUN2

Agencies

[Federal Register Volume 70, Number 167 (Tuesday, August 30, 2005)]
[Notices]
[Pages 51538-51540]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-17242]



[[Page 51537]]

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Part V





Department of Housing and Urban Development





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Certain Multifamily Mortgage Insurance Premiums, Changes; Notice

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / 
Notices

[[Page 51538]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-10; HUD-2005-0018]


Changes in Certain Multifamily Mortgage Insurance Premiums

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: In accordance with HUD regulations, this notice announces the 
changes of the mortgage insurance premiums (MIP) for the following 
Federal Housing Administration (FHA) multifamily mortgage insurance 
programs whose commitments will be issued or reissued in Fiscal Year 
(FY) 2006:
     All sections of the National Housing Act where the 
mortgagor equity is produced from the proceeds of the sale of low-
income housing tax credits (LIHTC): The MIP is reduced to 45 basis 
points.
     Section 207/223(f) refinance or purchase of apartments: 
The MIP is reduced to 45 basis points.
     Section 223(a)(7) refinance of FHA insured apartment 
mortgages: The MIP is reduced to 45 basis points.
    Under the Department of Housing and Urban Development Reform Act of 
1989, Pub. L. 101-235 (approved December 15, 1989) and HUD's 
implementing instructions, a sponsor is required to submit a 
certification regarding governmental assistance, including any low-
income housing tax credits, with all mortgage insurance applications.

DATES: Comment Due Date: September 29, 2005.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice to the Regulations Division, Office of General Counsel, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Washington, DC 20410-0500. Interested persons may also 
submit comments electronically through either:
     The Federal eRulemaking Portal at: www.regulations.gov; or
     The HUD electronic website at: www.epa.gov/feddocket. 
Follow the link entitled ``View Open HUD Dockets.'' Commenters should 
follow the instructions provided on that site to submit comments 
electronically.
    Facsimile (FAX) comments are not acceptable. In all cases, 
communications must refer to the docket number and title. All comments 
and communications submitted will be available, without revision, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Copies are also available for inspection and downloading 
at www.epa.gov/feddocket.

FOR FURTHER INFORMATION CONTACT: Michael McCullough, Director, Office 
of Multifamily Development, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410-8000, (202) 
708-1142 (this is not a toll-free number). Hearing- or speech-impaired 
individuals may access these numbers through TTY by calling the Federal 
Information Relay Service at (800) 877-8339 (this is a toll-free 
number).

SUPPLEMENTARY INFORMATION:

Introduction

    HUD's regulations at 24 CFR 207.252, 207.252a, and 207.254 provide 
that instead of setting the MIP at one specific rate for all programs, 
the Secretary is permitted to change an MIP program by program within 
the full range of HUD's statutory authority of one fourth of one 
percent to one percent of the outstanding mortgage principal per annum 
through a notice, as provided in section 203(c)(1) of the National 
Housing Act (the Act) (12 U.S.C. 1709(c)(1)). The rule states that HUD 
will provide a 30-day period for public comment on notices changing 
MIPs in multifamily insured housing programs.
    Pursuant to this comment procedure, this notice announces changes 
from FY 2005 in the MIP for programs authorized under the National 
Housing Act. The effective date for these changes is proposed to be 
October 1, 2005.
    The MIP rate is to be changed to 45 basis points for the following 
programs where the mortgagor's equity is being produced from the 
proceeds of the sale of Low Income Housing Tax Credits (LIHTCs): 
sections 221(d)(4), 221(d)(3), 207, 220, 231, 232, 241(a). Section 207/
223(f) refinance or purchase of apartments will be lowered from 50 to 
45 basis points; and section 223(a)(7) refinance of FHA insured 
apartment mortgages has been lowered from 50 to 45 basis points. The 
MIP rate for section 232 new construction or substantial rehabilitation 
of Health Care Facilities and section 241(a) Health Care Improvements 
and Additions will remain unchanged at 57 basis points. The MIP rate 
for sections 207, 213, 220, 231 without LIHTC, and 234(d), 242 and 
Title XI of the National Housing Act will remain unchanged at 50 basis 
points. The MIP rate for Refinancing of Health Care Facilities under 
section 232/223(a)(7) and 232/223(f) will remain at 50 basis points. 
The MIP rate for the following programs without low-income housing tax 
credits will also remain at 80 basis points: section 221(d)(3) for 
Nonprofit and Cooperatives for New Construction or Rehabilitation, 
section 223(d) for Operating Loss Loans for apartments and health care 
facilities, and section 241(a) for improvements and additions for 
apartments.
    Loans under section 221(d)(3) without LIHTC, section 241(a) for 
supplemental loans for additions or improvements to existing apartments 
without LIHTC, and section 223(d) for operating loss loans will require 
a credit subsidy obligation in fiscal year 2006. Only nonprofit and 
nonprofit cooperative mortgagors can obtain a 100 percent mortgage 
under section 221(d)(3). The nonprofits cannot be under the control or 
influence of profit-motivated entities and continue to require a HUD 
Headquarters approval prior to issuance of the firm commitment.
    Premiums for risk sharing applications under sections 542(b) and 
542(c) of the Housing and Community Development Act of 1992 will be 
reduced from 50 basis points to 45 basis points for those projects 
where low-income housing tax credits are part of the project financing. 
This will require a revision to the section 542(c) regulations at 24 
CFR 266.604 and renegotiation of section 542(b) agreements. Until the 
regulation change is effective and the section 542(b) agreements are 
modified, risk sharing premiums remain at 50 basis points for risk 
sharing projects with or without low-income housing tax credits.
    The mortgage insurance premiums to be in effect for FHA firm 
commitments issued, amended, or reissued in FY 2006 are shown in the 
table below:

[[Page 51539]]



                       Fiscal Year 2006 MIP Rates
                       [Multifamily Loan program]
------------------------------------------------------------------------
                                                                 Basis
                         Loan program                            points
------------------------------------------------------------------------
207 Multifamily Housing NC/SR................................         50
207 Multifamily Housing NC/SR with LIHTC.....................         45
207 Manufactured Home Parks..................................         50
207 Manufactured Home Parks with LIHTC.......................         45
213 Cooperatives.............................................         50
221(d)(3) Nonprofit/Cooperative mortgagor....................         80
221(d)(3) Limited dividend with LIHTC........................         45
221(d)(4) NC/SR with or without LIHTC........................         45
232 NC/SR Health Care Facilities.............................         57
232 NC/SR--Assisted Living Facilities with LIHTC.............         45
220 Urban Renewal Housing with LIHTC.........................         45
220 Urban Renewal Housing without LIHTC......................         50
231 Elderly Housing..........................................         50
231 Elderly Housing with LIHTC...............................         45
207/223(f) Refinance or Purchase for Apartments with or             * 45
 without LIHTC...............................................
232/223(f) Refinance for Health Care Facilities without LIHTC       * 50
232/223(f) Refinance for Health Care Facilities with LIHTC...       * 45
223(a)(7) Refinance of Apartments with or without LIHTC......         45
223(a)(7) Refinance of Health Care Facilities without LIHTC..         50
223(a)(7) Refinance of Health Care Facilities with LIHTC.....         45
223d Operating loss loan for Apartments......................         80
223d Operating loss loan for Health Care Facilities..........         80
241(a) Improvements/additions for Apartments/coop............         80
241(a) Improvements/additions for Apartments/coop with LIHTC.         45
241(a) Improvements/additions for Health Care Facilities              57
 without LIHTC...............................................
241(a) Improvements/additions for Health Care Facilities with         45
 LIHTC.......................................................
242 Hospitals................................................         50
Title XI--Group Practice.....................................        50
------------------------------------------------------------------------
* The first year MIP for these programs will remain at 100 basis points.

Applicable Mortgage Insurance Premium Procedures

    The MIP regulations are found in 24 CFR part 207. This notice is 
published in accordance with the procedures stated in 24 CFR 207.252, 
207.252(a), and 207.254.

Transition Guidelines

A. General

    If a firm commitment has been issued at a higher MIP and FHA has 
not initially endorsed the note, the lender may request the field 
office to reprocess the commitment at the lower MIP and reissue the 
commitment on or after the October 1, 2005 effective date.

B. Extension of Outstanding Firm Commitments

    FHA may extend outstanding firm commitments when the Hub/Program 
Center determines that the underwriting conclusions (rents, expenses, 
construction costs, mortgage amount and case required to close) are 
still valid in accordance with Mortgagee Letter 03-21, ``FHA Policies 
for Controlling Multifamily Firm Commitments and Credit Subsidy,'' 
dated December 3, 2003.

C. Reprocessing of Outstanding Firm Commitments

    FHA will consider requests from mortgagees to reprocess outstanding 
firm commitments at the lower mortgage insurance premium once the new 
premiums become effective on October 1, 2005:
    1. Outstanding commitments with initial 60-day expiration dates on 
or after the effective date of this MIP notice.
     FHA Multifamily HUD Hub/Program Center staff will simply 
reprocess these cases to reflect the impact of the lower MIP and 
reissue commitments with a new date.
    2. Outstanding commitments with initial expiration dates prior to 
the effective date of this MIP notice which have pending extension 
requests or have had extensions granted by FHA beyond the initial 60-
day period of the commitment.
     These cases will require more extensive reprocessing by 
FHA staff. Reprocessing will include an updated FHA field staff 
analysis and review of rents, expenses and construction/rehabilitation 
costs, particularly considering any changes in Davis-Bacon wage rates 
on new/substantial cases and cash required to close. An updated 
appraisal and other exhibits may be required from the mortgagee 
depending on the age of the appraisal and the age of the commitment 
(See Mortgagee Letter 03-21) . If reprocessing results in favorable 
underwriting conclusions, Hub/Program Center staff will reissue 
commitments with a new date at the new MIP.

D. Reopening of Expired Firm Commitments

    FHA will consider mortgagee's requests, which may be either updated 
traditional application processing (TAP) firm commitment applications 
or updated multifamily accelerated processing (MAP) applications with 
updated exhibits, to reopen expired 50 basis points commitments on or 
after October 1, 2005, provided that the reopening requests are 
received within 90 days of the expiration of the commitments and 
include the $.50 per thousand of requested mortgage reopening fee. 
Reopening requests will be reprocessed by FHA field staff under the 
instructions in paragraph C.2 above and Mortgagee Letter 03-21.
    After expiration of the 90-day reopening period, mortgagees are 
required to submit new applications with the $3 per thousand 
application fee.

[[Page 51540]]

Credit Subsidy

    A credit subsidy obligation is required for the three sections of 
the Act listed below. If the mortgagor's equity is produced from LIHTC 
for sections 221(d)(3) and 241(a), a credit subsidy obligation will not 
be required.
     Section 221(d)(3) for new construction or substantial 
rehabilitation
     Section 223(d) for operating loss loans for both 
apartments and health care facilities
     Section 241(a) for supplemental loans for additions or 
improvements for apartments only.

    Dated: August 18, 2005.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 05-17242 Filed 8-29-05; 8:45 am]
BILLING CODE 4210-27-P