Federal Housing Administration (FHA) Single Family Mortgage Insurance: Announcement of Moratorium on Risk-Based Premiums, 51505-51506 [E8-20299]
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Federal Register / Vol. 73, No. 171 / Wednesday, September 3, 2008 / Notices
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–5171–N–03]
Federal Housing Administration (FHA)
Single Family Mortgage Insurance:
Announcement of Moratorium on RiskBased Premiums
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Notice.
AGENCY:
SUMMARY: Consistent with the Housing
and Economic Recovery Act of 2008,
signed into law on July 30, 2008, this
notice announces a one-year
moratorium, commencing October 1,
2008, on premium pricing in accordance
with FHA’s risk-based premium
structure. This structure was set for
most Title II single family mortgage
insurance programs by a May 13, 2008,
notice, which provided for
implementation commencing on July
14, 2008. This notice provides
directions for FHA-approved mortgagees
to ensure their compliance with the
moratorium that commences October 1,
2008.
FOR FURTHER INFORMATION CONTACT:
Margaret E. Burns, Director, Office of
Single Family Program Development,
Department of Housing and Urban
Development, 451 Seventh Street, SW.,
Washington, DC 20410; telephone
number 202–708–2121 (this is not a tollfree number). Persons with hearing or
speech impairments may access this
number through TTY by calling the tollfree Federal Information Relay Service
at 800–877–8339.
SUPPLEMENTARY INFORMATION:
sroberts on PROD1PC70 with NOTICES
I. Background
By notice published by HUD in the
Federal Register on September 20, 2007
(72 FR 53872), FHA announced its plan
to implement risk-based premiums for
FHA loans and included the following
information in the notice. Section
203(c)(2) of the National Housing Act
(12 U.S.C. 1709(c)(2)) provides for
upfront and annual mortgage insurance
premiums for most FHA single family
programs. Such upfront and annual
insurance premiums are set at levels not
to exceed 2.25 percent 1 and 0.50
percent (0.55 percent for mortgages
1 First time homebuyers who receive approved
counseling pay an up-front premium not to exceed
2.0%. Section 2114 of the FHA Modernization Act
(Title I of Division Be of Public Law 110–289,
approved July 30, 2008) increased the maximum
level of the upfront premium to 3 percent except
for first time homebuyers. The maximum level for
first time homebuyers was increased to 2.75
percent.
VerDate Aug<31>2005
22:59 Sep 02, 2008
Jkt 214001
involving an original principal
obligation that is greater than 95 percent
of the appraised value of the property),
respectively, with a discount available
on the upfront premiums for some
mortgagors who are first-time
homebuyers and who successfully
complete pre-purchase homeownership
counseling approved by the Secretary.
FHA proposed a range of premiums
based on risk, so that it would be able
to offer options to: (1) Mortgagees
serving borrowers who were previously
underserved, or not served, by the
conventional marketplace; and (2)
mortgagees serving those borrowers
wishing to lower their premiums by, for
example, increasing their downpayment
or by improving their credit scores.
Additionally, FHA noted that offering a
range of premiums based on risk helps
to ensure the future financial soundness
of FHA programs that are obligations of
the Mutual Mortgage Insurance Fund
(MMIF or the Fund).
The September 20, 2007, notice
solicited public comment. Following
consideration of public comments, on
May 13, 2008 (73 FR 27704), FHA
issued a notice announcing its riskbased premium structure, which
included changes made in response to
public comment, and an
implementation date of July 14, 2008.
II. Authority for, and Purpose of, This
Notice
On July 30, 2008, the President signed
into law the Housing and Economic
Recovery Act of 2008 (Pub. L. 110–289,
122 Stat. 2654, approved July 30, 2008).
Title I of Division B is the FHA
Modernization Act of 2008 (Act).
Section 2133 of the Act places a one
year moratorium on FHA’s
implementation and carrying out of its
risk-based premium structure
commencing October 1, 2008. Section
2132 of the Act directs HUD to provide
by notice additional requirements
necessary to immediately carry out the
Act. Consistent with this section, HUD
is providing early notice to FHAapproved mortgagees of steps to be
taken to ensure compliance with section
2133.
Accordingly, this notice provides
directions to FHA-approved mortgagees
for the timely and orderly transition
into, and out of, the statutory
moratorium on risk-based premiums.
Given the commencement of the
moratorium on October 1, 2008, FHAapproved mortgagees are expected to
begin modifying their systems and
processes for compliance with the
moratorium on risk based pricing in
accordance with this notice. In addition
to the directions provided in this notice,
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
51505
FHA’s Web site at https://www.fha.gov
provides operational questions
anticipated to be asked by FHAapproved mortgagees and provides the
answers to these questions.
III. Applicability of Statutory Period
Section 2133 requires that HUD ‘‘shall
not take any action to implement or
carry out risk-based premiums’’ for a 12month period beginning on October 1,
2008. HUD considers that this
moratorium is intended to establish a
clearly delineated, one-year period to
cease FHA’s risk-based pricing of single
family mortgage insurance premiums,
but is not intended to disrupt the
reasonable expectations of borrowers
and mortgagees participating in the
FHA-insured mortgage lending process.
The statute and the risk-based premium
notice can be read consistently to
address such concerns. The May 13,
2008, notice stated that the risk-based
premium structure ‘‘is effective for new
FHA case number assignments made on
or after July 14, 2008.’’ (See 73 FR
27710.) Since the risk-based premium is
effective at the point at which a new
FHA case number assignment is made,
HUD considers the risk-based premium
to be carried out at that point.
Accordingly, the statutory moratorium
shall be effective and carried out on
October 1, 2008 for new FHA case
number assignments made on or after
that date. Again, HUD expects that all
FHA-approved mortgagees will begin
taking immediate steps to modify their
systems and procedures to assure
compliance with this requirement by
October 1, 2008.
The moratorium will continue for a
12-month period, applying to new FHA
case number assignments made through
and including September 30, 2009. In
this way, the applicability of the term of
the statutory period is clearly
established, and all participants in the
FHA-insured mortgage lending process
may adequately prepare for full
compliance with the statute. Mortgages
with FHA case number assignments
made on July 14, 2008, through and
including September 30, 2008, shall
maintain the risk-based premium
structure for the life of the mortgage.
IV. Directions to FHA-Approved
Mortgagees on Premium Pricing During
Moratorium
FHA is not authorized to, and will
not, insure any mortgages for which
new FHA case number assignments are
made on or after October 1, 2008 and
before October 1, 2009, for which the
premium has been set in accordance
with the May 13, 2008 notice.
E:\FR\FM\03SEN1.SGM
03SEN1
51506
Federal Register / Vol. 73, No. 171 / Wednesday, September 3, 2008 / Notices
The upfront and annual premiums on
mortgages for which new FHA case
number assignments are made on or
after October 1, 2008 and before October
1, 2009, are as follows:
Upfront Premiums: FHA will charge
an upfront premium in an amount equal
to the following percentages of the
mortgage:
• Purchase Money Mortgages and
Full-Credit Qualifying Refinances = 1.75
Percent
• Streamline Refinances (all types) =
1.50 Percent
• FHASecure (Delinquent
Mortgagors) = 3.00 Percent.
Annual Premiums: An annual
premium, shown in basis points below,
to be remitted on a monthly basis, will
also be charged based on the initial
loan-to-value ratio and length of the
mortgage (except for FHASecure
delinquent mortgages) according to the
following schedule:
• Purchase Money Mortgages, FullQualifying Refinances, and Streamline
Refinances:
LTV
Annual for Loans
>15 years
LTV
Annual for Loans
≤15 years
≤95 ........................................................................
>95 ........................................................................
50
55
≤90 ........................................................................
>90 ........................................................................
None
25
• FHASecure (delinquent
mortgagors):
LTV
Annual
(all loan terms)
≤95 ................................
>95 ................................
50
55
FHA will issue another notice that
will formally advise when the
moratorium is concluded and the
premium pricing structure that should
be followed once the moratorium ends.
sroberts on PROD1PC70 with NOTICES
V. Additional Premium Pricing
Requirements
All FHA-approved mortgagees must
begin to modify their systems and
procedures to be in compliance with the
following additional requirements
applicable to any mortgages for which
new FHA case number assignments are
made on or after October 1, 2008 and
before October 1, 2009:
1. The LTV ratio, computed to two
decimals (e.g., 95.65) is calculated by
dividing the mortgage amount prior to
adding on any upfront mortgage
insurance premium by the property’s
sale price or appraised value, whichever
is lower.
2. Borrowers who have decision credit
scores below 500 must have loan-tovalue ratios less than 90 percent to
qualify for an FHA-insured mortgage.
3. A ‘‘decision credit score’’ is
determined for each applicant according
to the following guidelines: when three
scores are available (one from each
national consumer reporting agency:
Equifax, TransUnion, and Experian),
the middle value is used; when only
two are available, the lesser of the two
is chosen; when only one is available,
then that score is used. If more than one
individual is applying for the same
mortgage, the lender should determine
the decision credit score for each
individual borrower and then use the
lowest score to determine the final
decision credit score for the application.
VerDate Aug<31>2005
22:59 Sep 02, 2008
Jkt 214001
4. All borrowers with eligible decision
credit scores must be scored by TOTAL.
5. The premium rates established in
this notice apply to those forward
mortgages insured under FHA’s Mutual
Mortgage Insurance (MMI) fund, the
Section 203(k) rehabilitation mortgage
insurance program, and individual
condominium units insured under
Section 234(c). The premiums in this
notice do not apply to mortgages
insured under Title I of the National
Housing Act, nor to reverse mortgages
under FHA’s Home Equity Conversion
Mortgage (HECM) program. The
premiums in this notice also do not
apply to Section 223(e) (declining
neighborhoods), Section 238(c) (military
impact areas in Georgia and New York),
Section 247 (Hawaiian Homelands), and
Section 248 (Indian Reservations).
Dated: August 26, 2008.
Brian D. Montgomery,
Assistant Secretary for Housing—Federal
Housing Commissioner.
[FR Doc. E8–20299 Filed 9–2–08; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
[FWS–R3–R–2008–N00168; 30136–1265–
0000–S3]
Seney National Wildlife Refuge,
Schoolcraft County, MI
Fish and Wildlife Service,
Interior.
ACTION: Notice of availability: draft
comprehensive conservation plan and
environmental assessment; request for
comments.
AGENCY:
SUMMARY: We, the U.S. Fish and
Wildlife Service (Service), announce the
availability of a draft comprehensive
conservation plan (CCP) and draft
environmental assessment (EA) for
Seney National Wildlife Refuge (NWR)
for public review and comment. In this
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
draft CCP/EA, we describe how we
propose to manage the refuge for the
next 15 years.
DATES: To ensure consideration, we
must receive your written comments by
October 8, 2008. An open house style
meeting will be held during the
comment period to receive comments
and provide information on the draft
plan. Special mailings, newspaper
articles, Internet postings, and other
media announcements will inform
people of the meetings and
opportunities for written comments.
ADDRESSES: Send your comments or
requests for more information by any of
the following methods. You may also
drop off comments in person at Seney
NWR.
• Agency Web site: View or download
a copy of the document and comment at
https://www.fws.gov/midwest/planning/
Seney.
• E-mail: r3planning@fws.gov.
Include ‘‘Seney Draft CCP/EA’’ in the
subject line of the message.
• Fax: 906–586–3800.
• Mail: Refuge Manager, Seney
National Wildlife Refuge, 1674 Refuge
Entrance Road, Seney, MI 49883–9501.
FOR FURTHER INFORMATION CONTACT:
Tracy Casselman, 906–586–9851 Ext 11.
SUPPLEMENTARY INFORMATION:
Introduction
With this notice, we continue the CCP
process for Seney NWR, which was
started with the notice of intent we
published in the Federal Register on
April 21, 2006 (71 FR 20722). For more
about the initial process and the history
of this refuge, see that notice. Seney
NWR was established in 1935 by
Executive Order under the Migratory
Bird Conservation Act for the protection
and production of migratory birds and
other wildlife. The Refuge encompasses
approximately 95,238 acres; of this area,
25,150 acres comprise the Seney
Wilderness Area, in which is contained
the Strangmoor Bog National Natural
E:\FR\FM\03SEN1.SGM
03SEN1
Agencies
[Federal Register Volume 73, Number 171 (Wednesday, September 3, 2008)]
[Notices]
[Pages 51505-51506]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-20299]
[[Page 51505]]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5171-N-03]
Federal Housing Administration (FHA) Single Family Mortgage
Insurance: Announcement of Moratorium on Risk-Based Premiums
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: Consistent with the Housing and Economic Recovery Act of 2008,
signed into law on July 30, 2008, this notice announces a one-year
moratorium, commencing October 1, 2008, on premium pricing in
accordance with FHA's risk-based premium structure. This structure was
set for most Title II single family mortgage insurance programs by a
May 13, 2008, notice, which provided for implementation commencing on
July 14, 2008. This notice provides directions for FHA-approved
mortgagees to ensure their compliance with the moratorium that
commences October 1, 2008.
FOR FURTHER INFORMATION CONTACT: Margaret E. Burns, Director, Office of
Single Family Program Development, Department of Housing and Urban
Development, 451 Seventh Street, SW., Washington, DC 20410; telephone
number 202-708-2121 (this is not a toll-free number). Persons with
hearing or speech impairments may access this number through TTY by
calling the toll-free Federal Information Relay Service at 800-877-
8339.
SUPPLEMENTARY INFORMATION:
I. Background
By notice published by HUD in the Federal Register on September 20,
2007 (72 FR 53872), FHA announced its plan to implement risk-based
premiums for FHA loans and included the following information in the
notice. Section 203(c)(2) of the National Housing Act (12 U.S.C.
1709(c)(2)) provides for upfront and annual mortgage insurance premiums
for most FHA single family programs. Such upfront and annual insurance
premiums are set at levels not to exceed 2.25 percent \1\ and 0.50
percent (0.55 percent for mortgages involving an original principal
obligation that is greater than 95 percent of the appraised value of
the property), respectively, with a discount available on the upfront
premiums for some mortgagors who are first-time homebuyers and who
successfully complete pre-purchase homeownership counseling approved by
the Secretary.
---------------------------------------------------------------------------
\1\ First time homebuyers who receive approved counseling pay an
up-front premium not to exceed 2.0%. Section 2114 of the FHA
Modernization Act (Title I of Division Be of Public Law 110-289,
approved July 30, 2008) increased the maximum level of the upfront
premium to 3 percent except for first time homebuyers. The maximum
level for first time homebuyers was increased to 2.75 percent.
---------------------------------------------------------------------------
FHA proposed a range of premiums based on risk, so that it would be
able to offer options to: (1) Mortgagees serving borrowers who were
previously underserved, or not served, by the conventional marketplace;
and (2) mortgagees serving those borrowers wishing to lower their
premiums by, for example, increasing their downpayment or by improving
their credit scores. Additionally, FHA noted that offering a range of
premiums based on risk helps to ensure the future financial soundness
of FHA programs that are obligations of the Mutual Mortgage Insurance
Fund (MMIF or the Fund).
The September 20, 2007, notice solicited public comment. Following
consideration of public comments, on May 13, 2008 (73 FR 27704), FHA
issued a notice announcing its risk-based premium structure, which
included changes made in response to public comment, and an
implementation date of July 14, 2008.
II. Authority for, and Purpose of, This Notice
On July 30, 2008, the President signed into law the Housing and
Economic Recovery Act of 2008 (Pub. L. 110-289, 122 Stat. 2654,
approved July 30, 2008). Title I of Division B is the FHA Modernization
Act of 2008 (Act). Section 2133 of the Act places a one year moratorium
on FHA's implementation and carrying out of its risk-based premium
structure commencing October 1, 2008. Section 2132 of the Act directs
HUD to provide by notice additional requirements necessary to
immediately carry out the Act. Consistent with this section, HUD is
providing early notice to FHA-approved mortgagees of steps to be taken
to ensure compliance with section 2133.
Accordingly, this notice provides directions to FHA-approved
mortgagees for the timely and orderly transition into, and out of, the
statutory moratorium on risk-based premiums. Given the commencement of
the moratorium on October 1, 2008, FHA-approved mortgagees are expected
to begin modifying their systems and processes for compliance with the
moratorium on risk based pricing in accordance with this notice. In
addition to the directions provided in this notice, FHA's Web site at
https://www.fha.gov provides operational questions anticipated to be
asked by FHA-approved mortgagees and provides the answers to these
questions.
III. Applicability of Statutory Period
Section 2133 requires that HUD ``shall not take any action to
implement or carry out risk-based premiums'' for a 12-month period
beginning on October 1, 2008. HUD considers that this moratorium is
intended to establish a clearly delineated, one-year period to cease
FHA's risk-based pricing of single family mortgage insurance premiums,
but is not intended to disrupt the reasonable expectations of borrowers
and mortgagees participating in the FHA-insured mortgage lending
process. The statute and the risk-based premium notice can be read
consistently to address such concerns. The May 13, 2008, notice stated
that the risk-based premium structure ``is effective for new FHA case
number assignments made on or after July 14, 2008.'' (See 73 FR 27710.)
Since the risk-based premium is effective at the point at which a new
FHA case number assignment is made, HUD considers the risk-based
premium to be carried out at that point. Accordingly, the statutory
moratorium shall be effective and carried out on October 1, 2008 for
new FHA case number assignments made on or after that date. Again, HUD
expects that all FHA-approved mortgagees will begin taking immediate
steps to modify their systems and procedures to assure compliance with
this requirement by October 1, 2008.
The moratorium will continue for a 12-month period, applying to new
FHA case number assignments made through and including September 30,
2009. In this way, the applicability of the term of the statutory
period is clearly established, and all participants in the FHA-insured
mortgage lending process may adequately prepare for full compliance
with the statute. Mortgages with FHA case number assignments made on
July 14, 2008, through and including September 30, 2008, shall maintain
the risk-based premium structure for the life of the mortgage.
IV. Directions to FHA-Approved Mortgagees on Premium Pricing During
Moratorium
FHA is not authorized to, and will not, insure any mortgages for
which new FHA case number assignments are made on or after October 1,
2008 and before October 1, 2009, for which the premium has been set in
accordance with the May 13, 2008 notice.
[[Page 51506]]
The upfront and annual premiums on mortgages for which new FHA case
number assignments are made on or after October 1, 2008 and before
October 1, 2009, are as follows:
Upfront Premiums: FHA will charge an upfront premium in an amount
equal to the following percentages of the mortgage:
Purchase Money Mortgages and Full-Credit Qualifying
Refinances = 1.75 Percent
Streamline Refinances (all types) = 1.50 Percent
FHASecure (Delinquent Mortgagors) = 3.00 Percent.
Annual Premiums: An annual premium, shown in basis points below, to
be remitted on a monthly basis, will also be charged based on the
initial loan-to-value ratio and length of the mortgage (except for
FHASecure delinquent mortgages) according to the following schedule:
Purchase Money Mortgages, Full-Qualifying Refinances, and
Streamline Refinances:
----------------------------------------------------------------------------------------------------------------
Annual for Loans Annual for Loans
LTV >15 years LTV <=15 years
----------------------------------------------------------------------------------------------------------------
<=95..................................... 50 <=90....................... None
>95...................................... 55 >90........................ 25
----------------------------------------------------------------------------------------------------------------
FHASecure (delinquent mortgagors):
------------------------------------------------------------------------
Annual (all loan
LTV terms)
------------------------------------------------------------------------
<=95............................................... 50
>95................................................ 55
------------------------------------------------------------------------
FHA will issue another notice that will formally advise when the
moratorium is concluded and the premium pricing structure that should
be followed once the moratorium ends.
V. Additional Premium Pricing Requirements
All FHA-approved mortgagees must begin to modify their systems and
procedures to be in compliance with the following additional
requirements applicable to any mortgages for which new FHA case number
assignments are made on or after October 1, 2008 and before October 1,
2009:
1. The LTV ratio, computed to two decimals (e.g., 95.65) is
calculated by dividing the mortgage amount prior to adding on any
upfront mortgage insurance premium by the property's sale price or
appraised value, whichever is lower.
2. Borrowers who have decision credit scores below 500 must have
loan-to-value ratios less than 90 percent to qualify for an FHA-insured
mortgage.
3. A ``decision credit score'' is determined for each applicant
according to the following guidelines: when three scores are available
(one from each national consumer reporting agency: Equifax, TransUnion,
and Experian[supreg]), the middle value is used; when only two are
available, the lesser of the two is chosen; when only one is available,
then that score is used. If more than one individual is applying for
the same mortgage, the lender should determine the decision credit
score for each individual borrower and then use the lowest score to
determine the final decision credit score for the application.
4. All borrowers with eligible decision credit scores must be
scored by TOTAL.
5. The premium rates established in this notice apply to those
forward mortgages insured under FHA's Mutual Mortgage Insurance (MMI)
fund, the Section 203(k) rehabilitation mortgage insurance program, and
individual condominium units insured under Section 234(c). The premiums
in this notice do not apply to mortgages insured under Title I of the
National Housing Act, nor to reverse mortgages under FHA's Home Equity
Conversion Mortgage (HECM) program. The premiums in this notice also do
not apply to Section 223(e) (declining neighborhoods), Section 238(c)
(military impact areas in Georgia and New York), Section 247 (Hawaiian
Homelands), and Section 248 (Indian Reservations).
Dated: August 26, 2008.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. E8-20299 Filed 9-2-08; 8:45 am]
BILLING CODE 4210-67-P