Changes in Certain Multifamily Mortgage Insurance Premiums and Regulatory Waiver for the 542(c) Risk-Sharing Program, 18473-18480 [2016-07405]
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FAA has, therefore, determined that
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The Regulatory Flexibility Act of 1980
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This rule is necessary to avoid
rerouting current air traffic. The
rerouting will increase miles flown,
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rule will likely impact a substantial
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If an agency determines that a
rulemaking will not result in a
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International Trade Impact Assessment
The Trade Agreements Act of 1979
(Pub. L. 96–39), as amended by the
Uruguay Round Agreements Act (Pub.
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L. 103–465), prohibits Federal agencies
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same impact on international and
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therefore, the requirements of Title II of
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FAA Order 1050.1F identifies FAA
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FAA has determined this rulemaking
action qualifies for the categorical
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and involves no extraordinary
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How To Obtain Additional Information
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3. Access the Government Printing
Office’s Web page at https://
www.gpo.gov/fdsys/.
Copies may also be obtained by
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rulemaking) to the Federal Aviation
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List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
■
Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
2. Amend § 71.33 by revising
paragraph (a) to read as follows:
■
§ 71.33
Class A airspace areas.
(a) That airspace of the United States,
including that airspace overlying the
waters within 12 nautical miles of the
coast of the 48 contiguous States, from
18,000 feet MSL to and including FL600
excluding the states of Alaska and
Hawaii.
*
*
*
*
*
Issued in Washington, DC, on March 29,
2016.
Leslie M. Swann,
Acting Manager, Airspace Policy Group.
[FR Doc. 2016–07397 Filed 3–29–16; 4:15 pm]
BILLING CODE 4910–13–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 266
[Docket No. FR–5876–N–03]
Changes in Certain Multifamily
Mortgage Insurance Premiums and
Regulatory Waiver for the 542(c) RiskSharing Program
Office of the Assistant
Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Announcement and waiver.
AGENCY:
On January 28, 2016, HUD
published a notice announcing
SUMMARY:
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proposed changes to the Fiscal Year
(FY) 2016 Mortgage Insurance
Premiums (MIPs) for certain FHA
Multifamily Housing Insurance
programs, for commitments issued or
reissued beginning April 1, 2016, and
solicited public comments on the
announced changes. This document
announces that the FY 2016 MIP
changes for certain FHA Multifamily
Housing Insurance programs, including
the 542(b) and 542(c) Risk-Sharing
programs, proposed on January 28,
2016, are being implemented for
commitments issued or reissued
beginning April 1, 2016. These new MIP
changes reflect the health of the FHA
Multifamily portfolio, simplify the rate
structure, and demonstrate HUD’s
commitment to promote its mission
initiatives. The MIP rates for mortgage
insurance programs under FHA’s Office
of Healthcare Programs, including
health care facilities and hospital
insurance programs, are not changed.
This document also addresses the
public comments received in response
to the proposed MIP changes. Lastly,
this MIP document also provides a
regulatory waiver for the 542(c) RiskSharing program to participate in the FY
2016 MIP changes for commitments
issued or reissued beginning April 1,
2016, for the remainder of FY 2016 and
for FY 2017.
DATES: Effective Date: The revised MIP
will be effective for any firm
commitments issued or reissued on or
after April 1, 2016. MIP rates will not be
modified for any loans that close or
reach initial endorsement prior to or on
March 31, 2016. MIP rates will not be
modified on FHA-insured loans initially
or finally endorsed, in conjunction with
interest rate reductions, or in
conjunction with loan modifications.
MIP rates for the 542(c) Risk-Sharing
program will be eligible only through
FY 2017.
FOR FURTHER INFORMATION CONTACT:
Theodore K. Toon, Director, Office of
Multifamily Production, Office of
Housing, Department of Housing and
Urban Development, 451 7th Street SW.,
Washington, DC 20410–8000; telephone
number: 202–402–8386 (this is not a
toll-free number). Hearing- or speechimpaired individuals may access these
numbers through TTY by calling the
Federal Relay Service at 800–877–8339
(this is a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
Section 203(c)(1) of the National
Housing Act (the Act) authorizes the
Secretary to set the premium charge for
insurance of mortgages under the
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various programs in title II of the Act.
The range within which the Secretary
may set such charges must be between
one-fourth of one percent per annum
and one percent per annum of the
amount of the principal obligation of the
mortgage outstanding at any time. (see
12 U.S.C. 1709(c)(1)). HUD’s
Multifamily Housing Mortgage
Insurance regulation at 24 CFR 207.254
provides that HUD must publish a
notice of future premium changes in the
Federal Register, and provide a 30-day
public comment period for the purpose
of accepting comments on whether the
proposed changes are appropriate.
On October 2, 2015, HUD published
a notice in the Federal Register, at 80
FR 59809, announcing that the MIPs for
FHA Multifamily, Health Care Facilities,
and Hospital mortgage insurance
programs that have commitments to be
issued or reissued in FY 2016 would be
the same as those published for FY
2015. HUD then published a notice on
January 28, 2016, at 81 FR 4926,
announcing proposed MIP changes for
FY 2016 in certain programs authorized
under the Act (12 U.S.C. 1709(c)(1)),
and certain other multifamily programs.
The January 28, 2016, notice was
proposed to promote two of HUD’s
mission priorities: affordable housing
and energy efficiency. HUD sought
public comment on the proposed
changes, as required by 24 CFR 207.254.
II. Public Comments
The public comment period on the
January 28, 2016, notice closed on
February 29, 2016, and HUD received 19
public comments by the close of the
public comment period. Comments
were submitted by mortgage lenders,
organizations representative of the
health care industry and of the home
building industry, private citizens, and
other interested parties. All public
comments can be found on
www.regulations.gov under the docket
number FR–5876–N–01. The following
presents the key issues raised by
commenters and HUD’s response to
these issues.
Authority
Comment: One commenter stated that
HUD had not demonstrated its authority
to implement these MIP changes, and
another commenter asked if HUD would
be issuing additional regulations to
confirm the appropriate MIP.
HUD Response: We disagree; section
203(c)(1) of the Act authorizes the
Secretary to set the premium charge for
insurance of mortgages under the
various programs in the Act, and 24 CFR
207.254 provides that HUD will
implement future multifamily premium
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changes by publishing a notice in the
Federal Register and soliciting public
comment for 30 days. HUD has
complied with those requirements and
no additional regulations must be issued
to implement these changes.
Comment: One commenter observed
that MIPs ‘‘must be determined based
on the prudent management of risk to
the government of the potential and
severity of mortgage losses.’’ In other
words, the MIPs should be set at levels
that are actuarially sufficient to cover
expected credit losses and other costs.
HUD Response: HUD agrees; portfolio
and actuarial analysis of the new rate
structure demonstrated that premium
revenues will exceed losses for the
foreseeable future.
Applicability of New Rates
Comment: Commenters urged HUD to
extend MIP changes to programs under
FHA’s Office of Healthcare Programs,
including the health care facilities and
hospital insurance programs, in order to
further promote these programs. These
commenters suggested that by excluding
properties financed under Section 232
and Section 242 programs, HUD misses
the opportunity to further the
Administration’s healthcare objectives.
HUD Response: HUD will continue to
evaluate MIP rates, but is not at this
time extending MIP changes to
programs under FHA’s Office of
Healthcare Programs, including the
health care facilities and hospital
insurance programs under sections 232
and 242, respectively.
Comment: Commenters asked that the
new MIP rates be made available to
existing FHA-insured loans on
properties that meet or will meet the
required standards, to loans undergoing
interest rate reductions through HUD’s
Multifamily Office of Asset Management
and Portfolio Oversight (OAMPO), to
loan modifications through OAMPO, to
loans initially endorsed (closed) but not
finally endorsed, and to loans on
recently built housing (within the past
5 years) that have or could obtain
Energy Star building certification.
HUD Response: New MIP rates cannot
be applied retroactively; each of these
scenarios represents already-closed
loans. Therefore, the MIP new rates will
become effective only for FHA firm
commitments issued or reissued, and
closed, on or after April 1, 2016.
Affordability
Comment: Commenters asked for a
change to the requirements to qualify for
the MIP rate for Broadly Affordable
housing: Properties must have
‘‘achievable and underwritten tax credit
rents at least 10 percent below
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comparable market rents.’’ Commenters
recommended that ‘‘achievable and’’ be
deleted because of the confusion it
could cause.
HUD Response: HUD disagrees. The
phrase (‘‘achievable and underwritten
tax credit rents at least 10 percent below
comparable market rents’’) is necessary
in order to differentiate from the
maximum or ceiling tax credit rents,
and is widely understood in the
industry.
Comment: Commenters recommended
that properties with greater than 90
percent affordable units, but without a
10 percent underwritten market rent
advantage necessary to qualify as
Broadly Affordable, should qualify for
the Affordable mixed-income MIP rate
of 35 basis points.
HUD Response: HUD agrees, and has
made the change in the final notice.
Comment: Commenters asked if a
property will qualify for the MIP
reduction if it has a project-based
Section 8 that runs less than 15 years or
is not renewed but the owner honors the
full 15-year use restriction.
HUD Response: HUD will be
providing the MIP reduction only to
properties that have a Section 8 contract
and use restriction that run a minimum
of 15 years after final endorsement.
Comment: Commenters recommended
that the new MIP rates be available in
situations where the property owner
accepts Section 8 voucher holders for
just the affordable units, rather than an
unlimited requirement for the entire
property, due to potential property
owners’ concerns about converting an
entire property to Section 8, over time,
in what is intended as a mixed- income
property. Another commenter stated
that in the MIP definition of Affordable
there is a requirement that the property
owner agree to accept Section 8 voucher
holders for the life of the loan, and the
commenter requested that this be
limited to the 15-year affordability
period rather than the life of the loan.
HUD Response: HUD disagrees, and
continues to require that for a property
owner to access the MIP rate under the
Affordable rate category the property
owner must agree to accept voucher
holders as residents for all vacancies
and for the life of the regulatory
agreement.
Lender Fee Restrictions for Certain MIP
Rate Categories (Broadly Affordable and
Green/Energy Efficient)
Comment: Commenters requested that
the 5 percent cap on total loan fees be
removed, or the threshold significantly
increased. The commenters stated that
small loans are challenging to originate,
underwrite, and service, due to certain
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fixed lender costs and time
requirements, and asked HUD to assess
the impact for loans that fall into the
$2–5 million range; commenting that
the market is familiar with the $5
million small loan limit set by the
Federal Housing Finance Agency for the
Fannie Mae and Freddie Mac small loan
programs. One commenter asked that
HUD provide underlying information on
the need for such a broad limitation.
HUD Response: The intent is to
ensure that the benefits of these MIP
rates directly benefit the properties and
residents. In FHA’s experience,
Multifamily Accelerated Processing
(MAP) lenders today are generally not
charging fees in excess of 5 percent on
loans under $5 million, even though
they may do so. According to aggregated
lender disclosures, just 6 percent of
FHA-insured loans under $5 million,
originated between FY 2013 and FY
2016, year-to-date, charged fees in
excess of 5 percent, and most of these
were concentrated in loans under $2
million. Accordingly, HUD does not
believe that this limitation will present
a burden to MAP lenders.
Comment: One commenter said that it
may be counterproductive to have a
loan fee limit on loans over $2 million
at precisely the time HUD is
encouraging MAP lenders to participate
in its Small Building Risk Share
Initiative (SBRS).
HUD Response: Loans originated
under Risk Share programs, including
SBRS, are exempt from the fee
limitations.
Comment: One commenter asked that
loans with firm commitments issued
prior to the January 28, 2016,
publication of the proposed MIP rates be
excluded from the fee limitations.
HUD Response: The loan fee
limitations only apply to loans with
FHA firm commitments issued or
reissued on or after April 1, 2016. Firm
commitments issued prior to that date
are exempt from the loan fee limitation
(though still subject to disclosure),
unless requesting reissuance or
modification to utilize the new rates.
Any loan accessing the lower rates will
also be subject to the loan fee limitation.
Inclusionary Zoning
Comment: Commenters wrote that
properties subject to inclusionary
zoning agreements are only eligible for
the reduced MIP rate if the term of the
affordability agreement is 30 years or
longer, compared to Low Income
Housing Tax Credit (LIHTC) or ProjectBased Rental Assistance (PBRA)
properties in this same rate category,
which have minimum compliance
periods of 15 years. They asked that the
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inclusionary zoning compliance period
be reduced from 30 years to 15 years.
HUD Response: The affordability
requirements under LIHTC or PBRA/
Section 8 are much deeper than those
generally required under inclusionary
zoning laws. HUD believes, therefore,
that the longer affordability requirement
(30 years) is reasonable.
Comment: One industry association
opposed using the FHA multifamily
insurance programs ‘‘to incentivize
complicated and controversial
inclusionary zoning laws at the local
level.’’ One commenter stated that some
studies have shown inclusionary zoning
may not be the most cost effective way
to address affordability, and can
actually lead to fewer units being
delivered.
HUD Response: HUD is not
incentivizing inclusionary zoning or
other set-aside laws through these rates.
Rather, the new structure recognizes
affordability in its many forms. HUD
will study the effects of these rates for
future rate considerations.
Green/Energy Efficient
Comment: A number of commenters
pointed out that the requirement for a
property owner to report building
performance 12 months after new
construction/substantial rehabilitation
is unreasonable, as the property must be
occupied, and operate for a full 12
months, before collecting and reporting
the data. Further, the requirement may
preclude properties from one or more of
the performance-based green building
certifications recognized for the green/
energy efficient MIP rate.
HUD Response: HUD agrees, and has
amended the notice to require reporting
of complying building performance
‘‘. . . no more than 15 months after
completion of new construction,
substantial rehabilitation or renovations,
or 15 months after break-even
occupancy.’’
Comment: Commenters stated that
small properties make up the majority of
all apartment buildings and often
provide housing affordability. Yet
properties under 20 units are excluded
from getting a 1–100 EnergyStar score
from Portfolio Manager, effectively
blocking them from taking advantage of
the reduced MIP rate. Commenters
asked that HUD consider, for the
purpose of accessing the Green/Energy
Efficient MIP rate, exempting smaller
properties from the requirement of a 75+
score on Portfolio Manager, as long as
they are or will be certified by one of the
recognized, independent green building
standards.
HUD Response: HUD agrees, and has
modified the notice. Small properties
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(under 20 units) must meet one of the
recognized independent green building/
energy efficiency standards in order to
access the Green/Energy Efficient MIP
rate, but are exempt from the 75+
Portfolio Manager score requirement.
Comment: One commenter
recommended that HUD consider tiered
or graduating MIP rates for varying
levels of energy efficiency to encourage
all property owners to undertake
efficiency retrofits to the extent feasible.
HUD Response: While HUD agrees
with the intent, such a rate structure
would be overly complex and
challenging to administer. HUD will
continue to review rates and
opportunities to promote its mission
objectives.
Comment: Multiple commenters
presented alternative green building
certification standards for consideration,
and/or asked what the process will be
for approval of green building
certification standards beyond those
listed in the notice.
HUD Response: In addition to the
recognized standards listed in the
notice, HUD will accept ‘‘other
industry-recognized green building
standards in the sole discretion of
HUD’s Office of Multifamily
Production.’’ Lenders should submit
such requests to the Director of
Multifamily Production, in HUD
headquarters. A committee will review
such requests for consideration. In
response to the specific requests
submitted with public comments, HUD
has revised the notice to recognize
Passive House certifications, LEED for
Existing Buildings: Operations &
Maintenance, and Living Building
Challenge Certification.
Comment: Commenters asked about
notice references to Real Estate
Assessment Center (REAC) protocols for
properties not achieving their proposed
green building standard or the 75+
Portfolio Manager score. One
commenter stated that the REAC
protocol should not be unilaterally
changed to incorporate tests on whether
properties are eligible for MIP
reductions. Others asked what actions
HUD would pursue for a property’s
failure to achieve green building
certification and a score of 75+ in
Portfolio Manager (for example, might
actions include 2530 flags or MIP
changes).
HUD Response: HUD is not changing
REAC protocols. The intent is not to be
punitive, but to ensure compliance with
the specified green building certification
and efficiency performance standards.
Properties that fail to achieve their
designated green building standard or
the 75+ Portfolio Manager score will be
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required to submit to HUD a compliance
plan and timeline for achieving the
required certification and performance,
acceptable to HUD. An owner working
in good faith and demonstrating
progress toward compliance in HUD’s
discretion will not be flagged in HUD’s
2530 previous participation system.
Comment: Commenters asked that the
notice clarify that the person certifying
the green building standard be
appropriately credentialed, and stated
that a Capital Needs Assessment (CNA)
provider may or may not be able to
provide an energy design certification,
unless they are licensed/accredited per
the Energy Auditor requirements.
HUD Response: HUD agrees, and has
struck CNA provider as a qualified
certifier of a green building standard or
energy design certification. The CNA
provider may certify, if appropriately
credentialed, in their capacity as
architect, engineer, energy auditor, and/
or approved certifier under the specified
green building standard.
Comment: Commenters recommended
that HUD delete the phrase ‘‘and
maintain’’ in reference to recognized
green building certifications, because
the notice requires a property to not
only achieve, but to maintain one of the
recognized, independent green building
certification standards, yet the named
green building rating systems are all
design and construction standards and
do not include provisions for
maintaining the certification.
HUD Response: HUD agrees, and has
modified the notice to strike ‘‘and
maintain’’ from the green building
certification requirement.
Comment: A commenter asked for
clarification on the requirement for a
property accessing the Green/Energy
Efficient MIP rate to achieve and
maintain the 75+ Portfolio Manager
score.
HUD Response: A property accessing
the Green/Energy Efficient MIP rate will
be required to maintain its efficiency
performance. The property owner will
submit its 1–100 ENERGY STAR score
from EPA’s Portfolio Manager report to
HUD, annually.
Comment: Commenters stated the
notice’s required score of 75+ on EPA’s
Portfolio Manager will be a ‘‘moving
target’’ as the underlying database of
properties recalibrates the scores, and
asked how an owner can certify to this
target.
HUD Response: The Portfolio
Manager data set and underlying
algorithm, and therefore the resulting
scores, will not be changed for the
foreseeable future, according to EPA.
The objective is to ensure sustained
property performance. If, in the future,
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the 1–100 ENERGY STAR score is
recalibrated, properties may
demonstrate ongoing compliance by
providing a copy of the Portfolio
Manager report showing building
consumption/performance has been
maintained, even if the resulting score
under a recalibrated scale is less than
75. Properties applying for the MIP rate
will have to comply with the current
standard score requirement that is
applicable at that time.
Comment: One commenter asked why
a property that can meet both the
Broadly Affordable and the Green/
Energy Efficient requirements is not
rewarded through a further rate
reduction.
HUD Response: The rates offered
under those two rate categories are the
lowest allowed by statute, so not further
reductions can be offered at this time.
Comment: One commenter asked
whether the reduction in MIP for Green/
Energy Efficient buildings have to be
from private investment, or if the energy
upgrades can be paid be from a
government program such as DOE
Weatherization or a similar State
program.
HUD Response: While it is anticipated
that many property owners may utilize
the additional mortgage proceeds made
possible by the lower MIP to retrofit
properties to meet the stringent
efficiency standards required, an owner
is not required to do so. Energy
efficiency retrofits can be paid from any
public or private source of funds,
subject to limitations on other debt
established by the FHA MAP program.
General
Comment: One commenter asked that
HUD’s posted data identify current
loans in its portfolio in the new MIP rate
categories, to allow a viewer to
determine which loans in the portfolio
would qualify for which rates.
HUD Response: HUD does not have
the level of detail in its dataset to allow
this identification. All loans originated
under the new rate structure will be
identified by rate category.
Comment: One commenter suggested
that the new MIP rate structure would
disadvantage market rate properties,
disproportionately harming rental
properties in secondary and tertiary
markets.
HUD Response: The largest reduction
from current rates to those effective
April 1, 2016, is for market rate
properties that are, or choose to, retrofit
to a recognized green building/energy
efficiency standard. This rate category
was added specifically to recognize and
promote green and energy efficient
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properties, whether affordable or market
rate.
Comment: A commenter observed that
the negative subsidy rates for MIP since
FY 2013 show that the multifamily
programs are generating more than
enough revenue to cover losses, and
requested that HUD review the MIPs for
all of its loan programs, and set the
levels at the rate necessary to cover
losses and costs to the program.
HUD Response: HUD has and will
continue to review its MIP rates.
Comment: Commenters requested
clarification with regard to the notice’s
reference to the upfront capitalized MIP
for construction loans and the absence
of a reference to a ‘‘look back’’ after final
closing that recalculates MIP at 1
percent of the actual outstanding
amount.
HUD Response: For New Construction
and Substantial Rehabilitation
transactions, the upfront capitalized
MIP is the applicable annual MIP rate,
times the loan amount, times the
number of years of construction,
rounded up to the nearest full year for
partial years.
Comment: One commenter stated that
there may be an advantage for risk-share
lenders compared to MAP lenders, on
tax credit projects in markets where tax
credit rents are close to market rents
(less than 10 percent advantage), and
the rate for MAP lender originated loans
will be 35 basis points, while risk-share
loans qualify as Broadly Affordable at
25 basis points.
HUD Response: The risk share
program is an affordable lending
program by statute, and is therefore
categorically qualified for the lowest
MIP rate. In the limited cases where the
described scenario may apply, we do
not believe the 10 basis points
differential will be enough to skew the
market away from MAP lending. HUD
will continue to explore the potential
disparity raised by the commenter, and
may consider changes to address the
issue in a subsequent MIP notice.
Comment: One commenter raised
concerns about the impact of Executive
Order 13690 and the new Federal Flood
Risk Management Standard (FFRMS) on
housing affordability when
implemented and applied to new FHAinsured loans for new construction and
substantial rehabilitation, Community
Development Block Grants (CDBG), and
HOME Investment Partnerships Program
funds.
HUD Comment: Executive Order
13690 and the new FFRMS are outside
the scope of this notice. Any actions
implementing the Executive order will
be the subject of a separate publication.
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15:13 Mar 30, 2016
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III. Final Notice
This notice adopts the proposed
changes in the January 28, 2016 notice.
Specifically, HUD is adopting changes
to FY 2016 MIPs for FHA-insured loans
on properties under specific
Multifamily Mortgage Insurance
programs effective on April 1, 2016. The
new annual multifamily mortgage
insurance rates will be structured as
four categories, as follows, and as
illustrated on the table below. Under
this rate structure, portfolio and
actuarial analysis demonstrates that
premium revenues will exceed losses
for the foreseeable future. HUD has
made minor changes in response to
comments received, as discussed below.
A. Market Rate Housing
Upfront and annual MIP rates will
remain unchanged for all FHA-insured
multifamily loan types on market rate
properties, except properties that meet
the criteria below for green and energy
efficient housing.
B. Broadly Affordable Housing
Annual MIPs will change from the
current rates generally between 45 and
50 basis points,1 to 25 basis points for
all multifamily FHA-insured loan types
that meet the criteria in this section.
All loans originated by Housing
Finance Agencies under FHA’s Section
542(c) Risk-Sharing program, and by
Qualified Participating Entities
including Fannie Mae and Freddie Mac
under FHA’s Section 542(b) RiskSharing program, will be eligible for this
25 basis points rate, multiplied by the
percentage risk assumed by FHA (see
table below). For all others to qualify,
the property must have Section 8
assistance or another recorded
affordability restriction, and/or LowIncome Housing Tax Credits (LIHTC).
These projects must either:
• Have at least 90 percent of units
covered by a Section 8 PBRA contract or
other State or Federal rental assistance
program contract serving very low
income residents, with a remaining term
of at least 15 years; or
• Have at least 90 percent of its units
covered by an affordability use
restriction under the LIHTC program or
a similar State or locally sponsored
program, with achievable and
underwritten tax credit rents at least 10
percent below comparable market rents,
and with a recorded regulatory
agreement in effect for at least 15 years
after final endorsement and monitored
by a public entity.
1 Except in the case of a 207/223(f) refinance or
purchase that has a current upfront capitalized MIP
basis points of 100.
PO 00000
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18477
To ensure that the benefits of these
MIP rates directly benefit the affordable
housing properties and residents,
lenders submitting applications for
loans using this MIP rate are limited, in
the total loan fees they may charge on
any loan greater than $2 million, to no
more than 5 percent of the insured loan
amount. Loan fees include (a)
origination and placement fees as
permitted by the Multifamily
Accelerated Processing (MAP)
Guide; 2 plus (b) trade profit, trade
premium or marketing gain earned on
the sale of the Government National
Mortgage Association (GNMA) security
at a value above par, even if the security
sale is delayed until after endorsement;
minus (c) loan fees applied by the
mortgagee to its legal expenses incurred
in connection with loan closing.
C. Affordable Housing
Annual MIPs will change from
current rates generally between 45 and
70 basis points,3 to 35 basis points for
all multifamily FHA-insured loan types.
To qualify, the property must provide a
set-aside of affordable units as defined
below, and agree to accept voucher
holders:
• Inclusionary Zoning, Density Bonus
Set-asides, and Other Local
Affordability Restrictions: Property
owners shall submit with the FHA
mortgage insurance application
evidence of a deed covenant or housing
ordinance on ‘‘inclusionary zoning’’ at
the subject property to evidence the
requirement for affordable unit setasides. A minimum of 10 percent of the
units must be affordable to, at most, a
family at 80 percent Area Median
Income (AMI), with rents sized to be
affordable at 30 percent of the income
at that level. The affordability set-aside
must be on site, be in effect for at least
30 years after final endorsement of the
FHA-insured mortgage, be monitored by
public authority, and be recorded in a
regulatory agreement;
• Project has between 10 percent and
90 percent of units covered by a Section
8 PBRA contract or other State or
Federal rental assistance program
contract serving very low-income
residents, with a remaining term of at
least 15 years;
• Project has between 10 percent and
90 percent of its units covered by an
affordability use restriction under the
LIHTC program or similar State or
locally sponsored program, with rents
2 https://portal.hud.gov/hudportal/HUD?src=/
program_offices/administration/hudclips/
guidebooks/hsg-GB4430.
3 Except in the case of a 207/223(f) refinance or
purchase that has a current upfront capitalized MIP
basis points of 100.
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jstallworth on DSK7TPTVN1PROD with RULES
sized at no greater than 30 percent of the
income eligible for occupancy under the
LIHTC program, with a recorded
regulatory agreement in effect for at
least 15 years after final endorsement
and monitored by a public entity; or
• Project has at least 90 percent of its
units covered by an affordability use
restriction under the LIHTC program or
similar State or locally sponsored
program, but without the rent advantage
required to qualify as Broadly
Affordable (achievable and
underwritten tax credit rents at least 10
percent below comparable market
rents), and with a recorded regulatory
agreement in effect for at least 15 years
after final endorsement and monitored
by a public entity.
To qualify for this MIP rate, the
project owner must also agree to accept
voucher holders under the Section 8
Housing Choice Voucher program or
other Federal program voucher holders
as residents for vacancies in units not
covered by project-based Section 8, and
execute a rider to the FHA regulatory
agreement, acceptable to HUD,
evidencing the owner’s agreement to
accept Section 8 vouchers for the life of
the regulatory agreement.
Change: In response to public
comments, HUD added the forth bullet
providing an extra class of properties to
those that are eligible for this affordable
housing MIP rate.
D. Green and Energy Efficient Housing
Annual MIPs will change from
current rates generally between 45 and
70 basis points,4 to 25 basis points for
all multifamily FHA-insured loan types.
Projects will access this rate to
encourage owners to adopt higher
standards for construction,
rehabilitation, repairs, maintenance, and
property operations that are more
energy efficient and sustainable than
traditional approaches to such activities.
The lower rate will incentivize owners
to implement measures that result in
projects with greater energy and water
efficiency, reduced operating costs,
improved indoor air quality and
resident comfort, and reduced overall
impact on the environment. It is
anticipated that mortgage proceeds will
be used to retrofit properties to meet the
stringent efficiency standards required
to access this lower MIP premium. For
properties that have already achieved a
green building standard and that are
refinancing with this lower MIP
premium, proceeds may be used to
complete further efficiency upgrades,
4 Except in the case of a 207/223(f) refinance or
purchase that has a current upfront capitalized MIP
basis points of 100.
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Jkt 238001
and/or to retrofit to the next-level green
certification standards.
To qualify, upon application for FHA
mortgage insurance, the owner must
evidence that the project has achieved,
or the owner must certify that it will
pursue and achieve, an industryrecognized standard for green building.
Acceptable, independently verified
standards include the Enterprise Green
Communities Criteria; U.S. Green
Building Council’s LEED–H, LEED–H
Midrise, LEED–NC, or LEED for Existing
Buildings: Operations & Maintenance;
ENERGY STAR certification; EarthCraft
House; EarthCraft Multifamily; Earth
Advantage New Homes; Greenpoint
Rated New Home; Greenpoint Rated
Existing Home (Whole House or Whole
Building label); the National Green
Building Standard (NGBS); Passive
Building Certification or EnerPHit
Retrofits certification from the Passive
House Institute US (PHIUS),
International Passive House
Association, or the Passive House
Institute; and Living Building Challenge
Certification from the International
Living Future Institute, or other
industry-recognized green building
standards, in the sole discretion of
HUD’s Office of Multifamily Production.
Further, the owner must certify that it
has achieved, or will pursue, achieve,
and maintain a score of 75 or better on
the 1–100 ENERGY STAR score, using
EPA’s Portfolio Manager. The
reasonableness of achieving and
maintaining the specified, independent
green building standard, and the score
of 75 or better in Portfolio Manager,
must be verified by the independent
conclusion of the qualified assessor
preparing the physical condition
assessment, and supported by the
physical condition assessment report
and recommendations, ASHRAE level II
energy audit (required for existing
structures only), and plans for new
construction, or rehabilitation, repairs,
and operations and maintenance. The
physical condition assessment report
submitted with the mortgage insurance
application must include a certification
from the architect, engineer, or energy
auditor that the planned scope of work
is reasonably sufficient to achieve and
maintain the specified certification.
Additionally, the owner must submit
to HUD evidence that the specified,
independent green building standard
has been achieved, and provide a copy
of the Portfolio Manager report showing
building performance at or above 75,
when those standards have been
achieved, and no more than 15 months
after completion of new construction,
substantial rehabilitation or renovations
or 15 months after break-even
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Fmt 4700
Sfmt 4700
occupancy. If not achieved, HUD may
impose protocols to ensure the owner
brings the property into compliance,
similar to protocols used by REAC for
unacceptable property standards. The
owner must submit the Portfolio
Manager report annually to HUD
showing that the property has
maintained its efficiency performance.
Note that properties of less than 20 units
may qualify for this MIP rate by
achieving an industry-recognized
standard for green building, as
described above, but are exempt from
the requirement to achieve a score of 75
or better on the 1–100 ENERGY STAR
score.
To ensure that the benefits of these
MIP rates directly benefit the properties
and residents, lenders submitting
applications for loans using this MIP
rate are limited in the total loan fees
they may charge on any loan greater
than $2 million, to no more than 5
percent of the insured loan amount.
Loan fees include (a) origination and
placement fees as permitted by the MAP
Guide; plus (b) trade profit, trade
premium or marketing gain earned on
the sale of the GNMA security at a value
above par, even if the security sale is
delayed until after endorsement; minus
(c) loan fees applied by the mortgagee to
its legal expenses incurred in
connection with loan closing.
Change: In response to public
comments, HUD makes the following
changes:
• Deletes the phrase ‘‘and maintain’’
in reference to the owner providing
evidence that the project has achieved
an industry-recognized standard for
green building.
• Adds to the list of certifications
Passive House certifications, LEED for
Existing Buildings: Operations &
Maintenance, and Living Building
Challenge Certification, and clarifies
that other industry-recognized green
building standards will be approved at
the discretion of HUD’s Office of
Multifamily Production.
• Clarifies that a CNA provider may
only certify a physical condition
assessment report, if appropriately
credentialed, in their capacity as
architect, engineer, energy auditor, and/
or approved certifier under the specified
green building standard.
• Amends the time frame for
providing the report showing
compliance with building performance
after completion of new construction,
substantial rehabilitation, or renovations
from no more than 12 months to no
more than 15 months. HUD also
provides that such report may be
provided 15 months after break-even
occupancy.
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• Requires that owners submit the
Portfolio Manager report annually to
HUD showing that the property has
maintained its efficiency performance.
• Provides that while small properties
(under 20 units) must meet one of the
recognized independent green building/
energy efficiency standards in order to
access the Green/Energy Efficient MIP
rate, small properties are exempt from
the requirement to achieve a score of 75
or better on the 1–100 ENERGY STAR
score.
IV. MIPs for Certain FHA’s Multifamily
Mortgage Insurance Programs for April
1, 2016
The chart below details the MIP rates
for each rate category, and each type of
18479
FHA multifamily mortgage insurance
covered under this notice. This notice
does not change MIP rates for programs
under FHA’s Office of Healthcare
Programs, including health care
facilities and hospital insurance
programs.
FHA MULTIFAMILY MORTGAGE INSURANCE PREMIUMS BY RATE CATEGORY
Current
upfront
capitalized
MIP *
basis
points
jstallworth on DSK7TPTVN1PROD with RULES
FHA Multifamily mortgage insurance program
MARKET RATE HOUSING .............................................................................
207 Multifamily New Constr/Sub Rehab w/o LIHTC .....................................
207 Manufactured Home Parks w/o LIHTC ..................................................
221(d)(4) New Constr/Sub Rehab w/o LIHTC ................................................
220 Urban Renewal Housing w/o LIHTC ......................................................
213 Cooperative ............................................................................................
207/223(f) Refi or Purchase for Apts. w/o LIHTC ...........................................
223(a)(7) Refi of Apts. w/o LIHTC ...................................................................
231 Elderly Housing w/o LIHTC ....................................................................
241(a) Supplemental Loans for Apts. coop w/o LIHTC ..................................
BROADLY AFFORDABLE HOUSING .............................................................
207 New Constr/Sub Rehab w 90 percent+ LIHTC, or 90 percent+ Section
8 ...................................................................................................................
207 Manufactured Home Parks w 90 percent+ LIHTC, or 90 percent+
Section 8 ......................................................................................................
221(d)(4) New Constr/Sub Rehab w 90 percent+ LIHTC, or 90 percent+
Section 8 ......................................................................................................
220 Urban Renewal Housing w 90 percent+ LIHTC, or 90 percent+ Section 8 ............................................................................................................
207/223(f) Refi or Purchase w 90 percent+ LIHTC, or 90 percent+ Section
8 ...................................................................................................................
223(a)(7) Refi w 90 percent+ LIHTC, or 90 percent+ Section 8 .....................
231 Elderly Housing w 90 percent+ LIHTC, or 90 percent+ Section 8 ........
241(a) for Apts./coop w 90 percent+ LIHTC, or 90 percent+ Section 8 .........
Section 542(b) Risk-Sharing ** ........................................................................
Section 542(c ) Risk-Sharing ** .......................................................................
AFFORDABLE: INCLUSIONARY VOUCHERS ..............................................
207 New Constr/Sub Rehab w Inclusionary Zoning, or 10 percent–90 percent LIHTC, or 10 percent–90 percent Section 8 ........................................
207 Manufactured Home Parks w Inclusionary Zoning, or 10 percent–90
percent LIHTC, or 10 percent–90 percent Section 8 ...................................
221(d)(4) New Constr/Sub Rehab w Inclusionary Zoning, or 10 percent–90
percent LIHTC, or 10 percent–90 percent Section 8 ...................................
220 Urban Renewal Housing w Inclusionary Zoning, or 10 percent–90 percent LIHTC, or 10 percent–90 percent Section 8 ........................................
207/223(f) Refi or Purchase w Inclusionary Zoning, or 10 percent–90 percent LIHTC, or 10 percent–90 percent Section 8 ........................................
223(a)(7) Refinance of Apts. w Inclusionary Zoning, or 10 percent–90 percent LIHTC, or 10 percent–90 percent Section 8 ........................................
231 Elderly Housing w Inclusionary Zoning, or 10 percent–90 percent
LIHTC, or 10 percent–90 percent Section 8 ................................................
241(a) Supplementals for Apts./coop w Inclusion Zoning, or 10 percent–90
percent LIHTC, or 10 percent–90 percent Section 8 ...................................
GREEN/ENERGY EFFICIENT HOUSING ......................................................
207 Multifamily New Construction/Sub Rehab w Green ...............................
207 Manufactured Home Parks with Green ..................................................
221(d)(4) New Constr/Sub Rehab w Green ....................................................
220 Urban Renewal Housing w Green .........................................................
207/223(f) Refi or Purchase for Apts. w Green ...............................................
223(a)(7) Refi of Apts. w Green ......................................................................
231 Elderly Housing w Green .......................................................................
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Apr 1, 2016,
upfront
capitalized
MIP *
basis
points
Current
annual MIP
basis
points
Apr 1, 2016,
annual MIP
basis points
........................
70
70
65
70
70
100
50
70
95
........................
Unchanged
70
70
65
70
70
100
50
70
95
25
........................
70
70
65
70
70
60
50
70
95
........................
Unchanged
70
70
65
70
70
60
50
70
95
25
45
25
45
25
45
25
45
25
45
25
45
25
45
25
45
25
100
50
45
45
50
50
........................
25
25
25
25
25
25
35
45
45
45
45
50
50
........................
25
25
25
25
25
25
35
45–70
35
45–70
35
45–70
35
45–70
35
45–65
35
45–65
35
45–70
35
45–70
35
100
35
45–60
35
50
35
45–50
35
45–70
35
45–70
35
45–95
........................
45–70
45–70
45–65
45–70
100
50
45–70
35
25
25
25
25
25
25
25
25
45–95
........................
45–70
45–70
45–65
45–70
45–60
45–50
45–70
35
25
25
25
25
25
25
25
25
Sfmt 4700
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Federal Register / Vol. 81, No. 62 / Thursday, March 31, 2016 / Rules and Regulations
FHA MULTIFAMILY MORTGAGE INSURANCE PREMIUMS BY RATE CATEGORY—Continued
Current
upfront
capitalized
MIP *
basis
points
FHA Multifamily mortgage insurance program
241(a) Supplemental Loans for Apts./coop w Green ......................................
Apr 1, 2016,
upfront
capitalized
MIP *
basis
points
45–95
Current
annual MIP
basis
points
25
Apr 1, 2016,
annual MIP
basis points
45–95
25
* Upfront premiums for multifamily refinancing programs are capitalized and based on the first year’s annual MIP for the applicable rate category (except market rate 223(f), where the upfront rate remains at 100 basis points). Upfront premiums for multifamily new construction and
substantial rehabilitation programs insuring advances are capitalized and based on the annual MIP for the applicable rate category for the entire
construction period, rounded up to the nearest whole year.
** Under the Sections 542(b) and 542(c) Risk-Sharing programs, the MIP collected by HUD is currently, and will continue to be, proportionate
to the percentage of risk assumed by FHA, as follows:
Program
April 1, 2016,
upfront capitalized MIP basis points
(bps)
FHA percent
of risk share
542(b) ................................
542(c) ................................
50
50
75
90
percent
percent
percent
percent
jstallworth on DSK7TPTVN1PROD with RULES
V. Regulatory Waiver for the 542(c)
Risk-Sharing Program
Section 106 of the Department of
Housing and Urban Development
Reform Act of 1989 (the HUD Reform
Act) (42 U.S.C. 3535(q)) requires HUD to
publish waivers in the Federal Register.
To allow for the FY 2016 MIP changes
covered in this notice to apply to the
542(c) Risk-Sharing program, authorized
under the Housing and Community
Development Act of 1992, HUD must
waive §§ 266.600, 266.602, and 266.604,
which currently prescribe percentages
for calculating the MIP under the 542(c)
Risk-Sharing program. HUD believes
these set percentages are no longer
appropriate for the 542(c) Risk-Sharing
program and issued a proposed rule on
March 8, 2016, entitled ‘‘Section 542(c)
Housing Finance Agencies Risk-Sharing
Program: Revisions to Regulations’’ (81
FR 12051), which would permit MIP
changes for the Risk-Sharing program to
be published through Federal Register
notice. All loans originated under the
Risk-Sharing programs are for affordable
housing purposes with recorded
affordability restrictions, and therefore
qualify as Broadly Affordable housing.
HUD believes that the 542(c) RiskSharing program, like the other
identified Multifamily Housing
programs, should be eligible for the MIP
changes in this notice. Therefore, HUD
is issuing this regulatory waiver of
§§ 266.600, 266.602, and 266.604 for FY
2016 and FY 2017. Commitments issued
or reissued for 542(c) Risk-Sharing
program beginning April 1, 2016,
through FY 2017 will be eligible for
these MIP changes.
VerDate Sep<11>2014
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12.5 (25 bps × 50 percent) .................................
12.5 (25 bps × 50 percent) .................................
18.75 (25 bps × 75 percent) ...............................
22.5 (25 bps × 90 percent) .................................
VI. Environmental Impact
This notice involves the
establishment of rate or cost
determinations and related external
administrative requirements that do not
constitute a development decision
affecting the physical condition of
specific project areas or building sites.
Accordingly, under 24 CFR 50.19(c)(6),
this notice is categorically excluded
from environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Dated: March 28, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary for
Housing.
Dated: March 28, 2016.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016–07405 Filed 3–30–16; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506–AB27
Imposition of Special Measure Against
FBME Bank Ltd., Formerly Known as
the Federal Bank of the Middle East
Ltd., as a Financial Institution of
Primary Money Laundering Concern
Financial Crimes Enforcement
Network (FinCEN), Treasury.
ACTION: Final rule.
AGENCY:
In a Notice of Finding (NOF)
published in the Federal Register on
SUMMARY:
PO 00000
Frm 00034
Fmt 4700
Sfmt 4700
April 1, 2016,
annual MIP basis points
(bps)
12.5 (25 bps × 50 percent).
12.5 (25 bps × 50 percent).
18.75 (25 bps × 75 percent).
22.5 (25 bps × 90 percent).
July 22, 2014, FinCEN found that
reasonable grounds exist for concluding
that FBME Bank Ltd. (FBME), formerly
known as the Federal Bank of the
Middle East Ltd., is a financial
institution of primary money laundering
concern pursuant to Section 311 of the
USA PATRIOT Act (Section 311). On
the same date, FinCEN also published in
the Federal Register a Notice of
Proposed Rulemaking (NPRM) to
propose the imposition of a special
measure authorized by Section 311
against FBME and opened a comment
period that closed on September 22,
2014. On July 29, 2015, FinCEN
published in the Federal Register a final
rule imposing the fifth special measure,
which the United States District Court
for the District of Columbia
subsequently enjoined before the rule’s
effective date of August 28, 2015.
FinCEN is issuing this final rule
imposing a prohibition on U.S. financial
institutions from opening or
maintaining a correspondent account
for, or on behalf of, FBME in place of
the rule published on July 29, 2015.
DATES: This final rule is effective July
29, 2016.
FOR FURTHER INFORMATION CONTACT: The
FinCEN Resource Center at (800) 767–
2825 or regcomments@fincen.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Provisions
On October 26, 2001, the President
signed into law the Uniting and
Strengthening America by Providing
Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001,
Public Law 107–56 (the USA PATRIOT
E:\FR\FM\31MRR1.SGM
31MRR1
]]>Agencies
[Federal Register Volume 81, Number 62 (Thursday, March 31, 2016)]
[Rules and Regulations]
[Pages 18473-18480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07405]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 266
[Docket No. FR-5876-N-03]
Changes in Certain Multifamily Mortgage Insurance Premiums and
Regulatory Waiver for the 542(c) Risk-Sharing Program
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Announcement and waiver.
-----------------------------------------------------------------------
SUMMARY: On January 28, 2016, HUD published a notice announcing
[[Page 18474]]
proposed changes to the Fiscal Year (FY) 2016 Mortgage Insurance
Premiums (MIPs) for certain FHA Multifamily Housing Insurance programs,
for commitments issued or reissued beginning April 1, 2016, and
solicited public comments on the announced changes. This document
announces that the FY 2016 MIP changes for certain FHA Multifamily
Housing Insurance programs, including the 542(b) and 542(c) Risk-
Sharing programs, proposed on January 28, 2016, are being implemented
for commitments issued or reissued beginning April 1, 2016. These new
MIP changes reflect the health of the FHA Multifamily portfolio,
simplify the rate structure, and demonstrate HUD's commitment to
promote its mission initiatives. The MIP rates for mortgage insurance
programs under FHA's Office of Healthcare Programs, including health
care facilities and hospital insurance programs, are not changed. This
document also addresses the public comments received in response to the
proposed MIP changes. Lastly, this MIP document also provides a
regulatory waiver for the 542(c) Risk-Sharing program to participate in
the FY 2016 MIP changes for commitments issued or reissued beginning
April 1, 2016, for the remainder of FY 2016 and for FY 2017.
DATES: Effective Date: The revised MIP will be effective for any firm
commitments issued or reissued on or after April 1, 2016. MIP rates
will not be modified for any loans that close or reach initial
endorsement prior to or on March 31, 2016. MIP rates will not be
modified on FHA-insured loans initially or finally endorsed, in
conjunction with interest rate reductions, or in conjunction with loan
modifications. MIP rates for the 542(c) Risk-Sharing program will be
eligible only through FY 2017.
FOR FURTHER INFORMATION CONTACT: Theodore K. Toon, Director, Office of
Multifamily Production, Office of Housing, Department of Housing and
Urban Development, 451 7th Street SW., Washington, DC 20410-8000;
telephone number: 202-402-8386 (this is not a toll-free number).
Hearing- or speech-impaired individuals may access these numbers
through TTY by calling the Federal Relay Service at 800-877-8339 (this
is a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
Section 203(c)(1) of the National Housing Act (the Act) authorizes
the Secretary to set the premium charge for insurance of mortgages
under the various programs in title II of the Act. The range within
which the Secretary may set such charges must be between one-fourth of
one percent per annum and one percent per annum of the amount of the
principal obligation of the mortgage outstanding at any time. (see 12
U.S.C. 1709(c)(1)). HUD's Multifamily Housing Mortgage Insurance
regulation at 24 CFR 207.254 provides that HUD must publish a notice of
future premium changes in the Federal Register, and provide a 30-day
public comment period for the purpose of accepting comments on whether
the proposed changes are appropriate.
On October 2, 2015, HUD published a notice in the Federal Register,
at 80 FR 59809, announcing that the MIPs for FHA Multifamily, Health
Care Facilities, and Hospital mortgage insurance programs that have
commitments to be issued or reissued in FY 2016 would be the same as
those published for FY 2015. HUD then published a notice on January 28,
2016, at 81 FR 4926, announcing proposed MIP changes for FY 2016 in
certain programs authorized under the Act (12 U.S.C. 1709(c)(1)), and
certain other multifamily programs. The January 28, 2016, notice was
proposed to promote two of HUD's mission priorities: affordable housing
and energy efficiency. HUD sought public comment on the proposed
changes, as required by 24 CFR 207.254.
II. Public Comments
The public comment period on the January 28, 2016, notice closed on
February 29, 2016, and HUD received 19 public comments by the close of
the public comment period. Comments were submitted by mortgage lenders,
organizations representative of the health care industry and of the
home building industry, private citizens, and other interested parties.
All public comments can be found on www.regulations.gov under the
docket number FR-5876-N-01. The following presents the key issues
raised by commenters and HUD's response to these issues.
Authority
Comment: One commenter stated that HUD had not demonstrated its
authority to implement these MIP changes, and another commenter asked
if HUD would be issuing additional regulations to confirm the
appropriate MIP.
HUD Response: We disagree; section 203(c)(1) of the Act authorizes
the Secretary to set the premium charge for insurance of mortgages
under the various programs in the Act, and 24 CFR 207.254 provides that
HUD will implement future multifamily premium changes by publishing a
notice in the Federal Register and soliciting public comment for 30
days. HUD has complied with those requirements and no additional
regulations must be issued to implement these changes.
Comment: One commenter observed that MIPs ``must be determined
based on the prudent management of risk to the government of the
potential and severity of mortgage losses.'' In other words, the MIPs
should be set at levels that are actuarially sufficient to cover
expected credit losses and other costs.
HUD Response: HUD agrees; portfolio and actuarial analysis of the
new rate structure demonstrated that premium revenues will exceed
losses for the foreseeable future.
Applicability of New Rates
Comment: Commenters urged HUD to extend MIP changes to programs
under FHA's Office of Healthcare Programs, including the health care
facilities and hospital insurance programs, in order to further promote
these programs. These commenters suggested that by excluding properties
financed under Section 232 and Section 242 programs, HUD misses the
opportunity to further the Administration's healthcare objectives.
HUD Response: HUD will continue to evaluate MIP rates, but is not
at this time extending MIP changes to programs under FHA's Office of
Healthcare Programs, including the health care facilities and hospital
insurance programs under sections 232 and 242, respectively.
Comment: Commenters asked that the new MIP rates be made available
to existing FHA-insured loans on properties that meet or will meet the
required standards, to loans undergoing interest rate reductions
through HUD's Multifamily Office of Asset Management and Portfolio
Oversight (OAMPO), to loan modifications through OAMPO, to loans
initially endorsed (closed) but not finally endorsed, and to loans on
recently built housing (within the past 5 years) that have or could
obtain Energy Star building certification.
HUD Response: New MIP rates cannot be applied retroactively; each
of these scenarios represents already-closed loans. Therefore, the MIP
new rates will become effective only for FHA firm commitments issued or
reissued, and closed, on or after April 1, 2016.
Affordability
Comment: Commenters asked for a change to the requirements to
qualify for the MIP rate for Broadly Affordable housing: Properties
must have ``achievable and underwritten tax credit rents at least 10
percent below
[[Page 18475]]
comparable market rents.'' Commenters recommended that ``achievable
and'' be deleted because of the confusion it could cause.
HUD Response: HUD disagrees. The phrase (``achievable and
underwritten tax credit rents at least 10 percent below comparable
market rents'') is necessary in order to differentiate from the maximum
or ceiling tax credit rents, and is widely understood in the industry.
Comment: Commenters recommended that properties with greater than
90 percent affordable units, but without a 10 percent underwritten
market rent advantage necessary to qualify as Broadly Affordable,
should qualify for the Affordable mixed-income MIP rate of 35 basis
points.
HUD Response: HUD agrees, and has made the change in the final
notice.
Comment: Commenters asked if a property will qualify for the MIP
reduction if it has a project-based Section 8 that runs less than 15
years or is not renewed but the owner honors the full 15-year use
restriction.
HUD Response: HUD will be providing the MIP reduction only to
properties that have a Section 8 contract and use restriction that run
a minimum of 15 years after final endorsement.
Comment: Commenters recommended that the new MIP rates be available
in situations where the property owner accepts Section 8 voucher
holders for just the affordable units, rather than an unlimited
requirement for the entire property, due to potential property owners'
concerns about converting an entire property to Section 8, over time,
in what is intended as a mixed- income property. Another commenter
stated that in the MIP definition of Affordable there is a requirement
that the property owner agree to accept Section 8 voucher holders for
the life of the loan, and the commenter requested that this be limited
to the 15-year affordability period rather than the life of the loan.
HUD Response: HUD disagrees, and continues to require that for a
property owner to access the MIP rate under the Affordable rate
category the property owner must agree to accept voucher holders as
residents for all vacancies and for the life of the regulatory
agreement.
Lender Fee Restrictions for Certain MIP Rate Categories (Broadly
Affordable and Green/Energy Efficient)
Comment: Commenters requested that the 5 percent cap on total loan
fees be removed, or the threshold significantly increased. The
commenters stated that small loans are challenging to originate,
underwrite, and service, due to certain fixed lender costs and time
requirements, and asked HUD to assess the impact for loans that fall
into the $2-5 million range; commenting that the market is familiar
with the $5 million small loan limit set by the Federal Housing Finance
Agency for the Fannie Mae and Freddie Mac small loan programs. One
commenter asked that HUD provide underlying information on the need for
such a broad limitation.
HUD Response: The intent is to ensure that the benefits of these
MIP rates directly benefit the properties and residents. In FHA's
experience, Multifamily Accelerated Processing (MAP) lenders today are
generally not charging fees in excess of 5 percent on loans under $5
million, even though they may do so. According to aggregated lender
disclosures, just 6 percent of FHA-insured loans under $5 million,
originated between FY 2013 and FY 2016, year-to-date, charged fees in
excess of 5 percent, and most of these were concentrated in loans under
$2 million. Accordingly, HUD does not believe that this limitation will
present a burden to MAP lenders.
Comment: One commenter said that it may be counterproductive to
have a loan fee limit on loans over $2 million at precisely the time
HUD is encouraging MAP lenders to participate in its Small Building
Risk Share Initiative (SBRS).
HUD Response: Loans originated under Risk Share programs, including
SBRS, are exempt from the fee limitations.
Comment: One commenter asked that loans with firm commitments
issued prior to the January 28, 2016, publication of the proposed MIP
rates be excluded from the fee limitations.
HUD Response: The loan fee limitations only apply to loans with FHA
firm commitments issued or reissued on or after April 1, 2016. Firm
commitments issued prior to that date are exempt from the loan fee
limitation (though still subject to disclosure), unless requesting
reissuance or modification to utilize the new rates. Any loan accessing
the lower rates will also be subject to the loan fee limitation.
Inclusionary Zoning
Comment: Commenters wrote that properties subject to inclusionary
zoning agreements are only eligible for the reduced MIP rate if the
term of the affordability agreement is 30 years or longer, compared to
Low Income Housing Tax Credit (LIHTC) or Project-Based Rental
Assistance (PBRA) properties in this same rate category, which have
minimum compliance periods of 15 years. They asked that the
inclusionary zoning compliance period be reduced from 30 years to 15
years.
HUD Response: The affordability requirements under LIHTC or PBRA/
Section 8 are much deeper than those generally required under
inclusionary zoning laws. HUD believes, therefore, that the longer
affordability requirement (30 years) is reasonable.
Comment: One industry association opposed using the FHA multifamily
insurance programs ``to incentivize complicated and controversial
inclusionary zoning laws at the local level.'' One commenter stated
that some studies have shown inclusionary zoning may not be the most
cost effective way to address affordability, and can actually lead to
fewer units being delivered.
HUD Response: HUD is not incentivizing inclusionary zoning or other
set-aside laws through these rates. Rather, the new structure
recognizes affordability in its many forms. HUD will study the effects
of these rates for future rate considerations.
Green/Energy Efficient
Comment: A number of commenters pointed out that the requirement
for a property owner to report building performance 12 months after new
construction/substantial rehabilitation is unreasonable, as the
property must be occupied, and operate for a full 12 months, before
collecting and reporting the data. Further, the requirement may
preclude properties from one or more of the performance-based green
building certifications recognized for the green/energy efficient MIP
rate.
HUD Response: HUD agrees, and has amended the notice to require
reporting of complying building performance ``. . . no more than 15
months after completion of new construction, substantial rehabilitation
or renovations, or 15 months after break-even occupancy.''
Comment: Commenters stated that small properties make up the
majority of all apartment buildings and often provide housing
affordability. Yet properties under 20 units are excluded from getting
a 1-100 EnergyStar score from Portfolio Manager, effectively blocking
them from taking advantage of the reduced MIP rate. Commenters asked
that HUD consider, for the purpose of accessing the Green/Energy
Efficient MIP rate, exempting smaller properties from the requirement
of a 75+ score on Portfolio Manager, as long as they are or will be
certified by one of the recognized, independent green building
standards.
HUD Response: HUD agrees, and has modified the notice. Small
properties
[[Page 18476]]
(under 20 units) must meet one of the recognized independent green
building/energy efficiency standards in order to access the Green/
Energy Efficient MIP rate, but are exempt from the 75+ Portfolio
Manager score requirement.
Comment: One commenter recommended that HUD consider tiered or
graduating MIP rates for varying levels of energy efficiency to
encourage all property owners to undertake efficiency retrofits to the
extent feasible.
HUD Response: While HUD agrees with the intent, such a rate
structure would be overly complex and challenging to administer. HUD
will continue to review rates and opportunities to promote its mission
objectives.
Comment: Multiple commenters presented alternative green building
certification standards for consideration, and/or asked what the
process will be for approval of green building certification standards
beyond those listed in the notice.
HUD Response: In addition to the recognized standards listed in the
notice, HUD will accept ``other industry-recognized green building
standards in the sole discretion of HUD's Office of Multifamily
Production.'' Lenders should submit such requests to the Director of
Multifamily Production, in HUD headquarters. A committee will review
such requests for consideration. In response to the specific requests
submitted with public comments, HUD has revised the notice to recognize
Passive House certifications, LEED for Existing Buildings: Operations &
Maintenance, and Living Building Challenge Certification.
Comment: Commenters asked about notice references to Real Estate
Assessment Center (REAC) protocols for properties not achieving their
proposed green building standard or the 75+ Portfolio Manager score.
One commenter stated that the REAC protocol should not be unilaterally
changed to incorporate tests on whether properties are eligible for MIP
reductions. Others asked what actions HUD would pursue for a property's
failure to achieve green building certification and a score of 75+ in
Portfolio Manager (for example, might actions include 2530 flags or MIP
changes).
HUD Response: HUD is not changing REAC protocols. The intent is not
to be punitive, but to ensure compliance with the specified green
building certification and efficiency performance standards. Properties
that fail to achieve their designated green building standard or the
75+ Portfolio Manager score will be required to submit to HUD a
compliance plan and timeline for achieving the required certification
and performance, acceptable to HUD. An owner working in good faith and
demonstrating progress toward compliance in HUD's discretion will not
be flagged in HUD's 2530 previous participation system.
Comment: Commenters asked that the notice clarify that the person
certifying the green building standard be appropriately credentialed,
and stated that a Capital Needs Assessment (CNA) provider may or may
not be able to provide an energy design certification, unless they are
licensed/accredited per the Energy Auditor requirements.
HUD Response: HUD agrees, and has struck CNA provider as a
qualified certifier of a green building standard or energy design
certification. The CNA provider may certify, if appropriately
credentialed, in their capacity as architect, engineer, energy auditor,
and/or approved certifier under the specified green building standard.
Comment: Commenters recommended that HUD delete the phrase ``and
maintain'' in reference to recognized green building certifications,
because the notice requires a property to not only achieve, but to
maintain one of the recognized, independent green building
certification standards, yet the named green building rating systems
are all design and construction standards and do not include provisions
for maintaining the certification.
HUD Response: HUD agrees, and has modified the notice to strike
``and maintain'' from the green building certification requirement.
Comment: A commenter asked for clarification on the requirement for
a property accessing the Green/Energy Efficient MIP rate to achieve and
maintain the 75+ Portfolio Manager score.
HUD Response: A property accessing the Green/Energy Efficient MIP
rate will be required to maintain its efficiency performance. The
property owner will submit its 1-100 ENERGY STAR score from EPA's
Portfolio Manager report to HUD, annually.
Comment: Commenters stated the notice's required score of 75+ on
EPA's Portfolio Manager will be a ``moving target'' as the underlying
database of properties recalibrates the scores, and asked how an owner
can certify to this target.
HUD Response: The Portfolio Manager data set and underlying
algorithm, and therefore the resulting scores, will not be changed for
the foreseeable future, according to EPA. The objective is to ensure
sustained property performance. If, in the future, the 1-100 ENERGY
STAR score is recalibrated, properties may demonstrate ongoing
compliance by providing a copy of the Portfolio Manager report showing
building consumption/performance has been maintained, even if the
resulting score under a recalibrated scale is less than 75. Properties
applying for the MIP rate will have to comply with the current standard
score requirement that is applicable at that time.
Comment: One commenter asked why a property that can meet both the
Broadly Affordable and the Green/Energy Efficient requirements is not
rewarded through a further rate reduction.
HUD Response: The rates offered under those two rate categories are
the lowest allowed by statute, so not further reductions can be offered
at this time.
Comment: One commenter asked whether the reduction in MIP for
Green/Energy Efficient buildings have to be from private investment, or
if the energy upgrades can be paid be from a government program such as
DOE Weatherization or a similar State program.
HUD Response: While it is anticipated that many property owners may
utilize the additional mortgage proceeds made possible by the lower MIP
to retrofit properties to meet the stringent efficiency standards
required, an owner is not required to do so. Energy efficiency
retrofits can be paid from any public or private source of funds,
subject to limitations on other debt established by the FHA MAP
program.
General
Comment: One commenter asked that HUD's posted data identify
current loans in its portfolio in the new MIP rate categories, to allow
a viewer to determine which loans in the portfolio would qualify for
which rates.
HUD Response: HUD does not have the level of detail in its dataset
to allow this identification. All loans originated under the new rate
structure will be identified by rate category.
Comment: One commenter suggested that the new MIP rate structure
would disadvantage market rate properties, disproportionately harming
rental properties in secondary and tertiary markets.
HUD Response: The largest reduction from current rates to those
effective April 1, 2016, is for market rate properties that are, or
choose to, retrofit to a recognized green building/energy efficiency
standard. This rate category was added specifically to recognize and
promote green and energy efficient
[[Page 18477]]
properties, whether affordable or market rate.
Comment: A commenter observed that the negative subsidy rates for
MIP since FY 2013 show that the multifamily programs are generating
more than enough revenue to cover losses, and requested that HUD review
the MIPs for all of its loan programs, and set the levels at the rate
necessary to cover losses and costs to the program.
HUD Response: HUD has and will continue to review its MIP rates.
Comment: Commenters requested clarification with regard to the
notice's reference to the upfront capitalized MIP for construction
loans and the absence of a reference to a ``look back'' after final
closing that recalculates MIP at 1 percent of the actual outstanding
amount.
HUD Response: For New Construction and Substantial Rehabilitation
transactions, the upfront capitalized MIP is the applicable annual MIP
rate, times the loan amount, times the number of years of construction,
rounded up to the nearest full year for partial years.
Comment: One commenter stated that there may be an advantage for
risk-share lenders compared to MAP lenders, on tax credit projects in
markets where tax credit rents are close to market rents (less than 10
percent advantage), and the rate for MAP lender originated loans will
be 35 basis points, while risk-share loans qualify as Broadly
Affordable at 25 basis points.
HUD Response: The risk share program is an affordable lending
program by statute, and is therefore categorically qualified for the
lowest MIP rate. In the limited cases where the described scenario may
apply, we do not believe the 10 basis points differential will be
enough to skew the market away from MAP lending. HUD will continue to
explore the potential disparity raised by the commenter, and may
consider changes to address the issue in a subsequent MIP notice.
Comment: One commenter raised concerns about the impact of
Executive Order 13690 and the new Federal Flood Risk Management
Standard (FFRMS) on housing affordability when implemented and applied
to new FHA-insured loans for new construction and substantial
rehabilitation, Community Development Block Grants (CDBG), and HOME
Investment Partnerships Program funds.
HUD Comment: Executive Order 13690 and the new FFRMS are outside
the scope of this notice. Any actions implementing the Executive order
will be the subject of a separate publication.
III. Final Notice
This notice adopts the proposed changes in the January 28, 2016
notice. Specifically, HUD is adopting changes to FY 2016 MIPs for FHA-
insured loans on properties under specific Multifamily Mortgage
Insurance programs effective on April 1, 2016. The new annual
multifamily mortgage insurance rates will be structured as four
categories, as follows, and as illustrated on the table below. Under
this rate structure, portfolio and actuarial analysis demonstrates that
premium revenues will exceed losses for the foreseeable future. HUD has
made minor changes in response to comments received, as discussed
below.
A. Market Rate Housing
Upfront and annual MIP rates will remain unchanged for all FHA-
insured multifamily loan types on market rate properties, except
properties that meet the criteria below for green and energy efficient
housing.
B. Broadly Affordable Housing
Annual MIPs will change from the current rates generally between 45
and 50 basis points,\1\ to 25 basis points for all multifamily FHA-
insured loan types that meet the criteria in this section.
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\1\ Except in the case of a 207/223(f) refinance or purchase
that has a current upfront capitalized MIP basis points of 100.
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All loans originated by Housing Finance Agencies under FHA's
Section 542(c) Risk-Sharing program, and by Qualified Participating
Entities including Fannie Mae and Freddie Mac under FHA's Section
542(b) Risk-Sharing program, will be eligible for this 25 basis points
rate, multiplied by the percentage risk assumed by FHA (see table
below). For all others to qualify, the property must have Section 8
assistance or another recorded affordability restriction, and/or Low-
Income Housing Tax Credits (LIHTC).
These projects must either:
Have at least 90 percent of units covered by a Section 8
PBRA contract or other State or Federal rental assistance program
contract serving very low income residents, with a remaining term of at
least 15 years; or
Have at least 90 percent of its units covered by an
affordability use restriction under the LIHTC program or a similar
State or locally sponsored program, with achievable and underwritten
tax credit rents at least 10 percent below comparable market rents, and
with a recorded regulatory agreement in effect for at least 15 years
after final endorsement and monitored by a public entity.
To ensure that the benefits of these MIP rates directly benefit the
affordable housing properties and residents, lenders submitting
applications for loans using this MIP rate are limited, in the total
loan fees they may charge on any loan greater than $2 million, to no
more than 5 percent of the insured loan amount. Loan fees include (a)
origination and placement fees as permitted by the Multifamily
Accelerated Processing (MAP) Guide; \2\ plus (b) trade profit, trade
premium or marketing gain earned on the sale of the Government National
Mortgage Association (GNMA) security at a value above par, even if the
security sale is delayed until after endorsement; minus (c) loan fees
applied by the mortgagee to its legal expenses incurred in connection
with loan closing.
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\2\ https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/guidebooks/hsg-GB4430.
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C. Affordable Housing
Annual MIPs will change from current rates generally between 45 and
70 basis points,\3\ to 35 basis points for all multifamily FHA-insured
loan types. To qualify, the property must provide a set-aside of
affordable units as defined below, and agree to accept voucher holders:
---------------------------------------------------------------------------
\3\ Except in the case of a 207/223(f) refinance or purchase
that has a current upfront capitalized MIP basis points of 100.
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Inclusionary Zoning, Density Bonus Set-asides, and Other
Local Affordability Restrictions: Property owners shall submit with the
FHA mortgage insurance application evidence of a deed covenant or
housing ordinance on ``inclusionary zoning'' at the subject property to
evidence the requirement for affordable unit set-asides. A minimum of
10 percent of the units must be affordable to, at most, a family at 80
percent Area Median Income (AMI), with rents sized to be affordable at
30 percent of the income at that level. The affordability set-aside
must be on site, be in effect for at least 30 years after final
endorsement of the FHA-insured mortgage, be monitored by public
authority, and be recorded in a regulatory agreement;
Project has between 10 percent and 90 percent of units
covered by a Section 8 PBRA contract or other State or Federal rental
assistance program contract serving very low-income residents, with a
remaining term of at least 15 years;
Project has between 10 percent and 90 percent of its units
covered by an affordability use restriction under the LIHTC program or
similar State or locally sponsored program, with rents
[[Page 18478]]
sized at no greater than 30 percent of the income eligible for
occupancy under the LIHTC program, with a recorded regulatory agreement
in effect for at least 15 years after final endorsement and monitored
by a public entity; or
Project has at least 90 percent of its units covered by an
affordability use restriction under the LIHTC program or similar State
or locally sponsored program, but without the rent advantage required
to qualify as Broadly Affordable (achievable and underwritten tax
credit rents at least 10 percent below comparable market rents), and
with a recorded regulatory agreement in effect for at least 15 years
after final endorsement and monitored by a public entity.
To qualify for this MIP rate, the project owner must also agree to
accept voucher holders under the Section 8 Housing Choice Voucher
program or other Federal program voucher holders as residents for
vacancies in units not covered by project-based Section 8, and execute
a rider to the FHA regulatory agreement, acceptable to HUD, evidencing
the owner's agreement to accept Section 8 vouchers for the life of the
regulatory agreement.
Change: In response to public comments, HUD added the forth bullet
providing an extra class of properties to those that are eligible for
this affordable housing MIP rate.
D. Green and Energy Efficient Housing
Annual MIPs will change from current rates generally between 45 and
70 basis points,\4\ to 25 basis points for all multifamily FHA-insured
loan types. Projects will access this rate to encourage owners to adopt
higher standards for construction, rehabilitation, repairs,
maintenance, and property operations that are more energy efficient and
sustainable than traditional approaches to such activities. The lower
rate will incentivize owners to implement measures that result in
projects with greater energy and water efficiency, reduced operating
costs, improved indoor air quality and resident comfort, and reduced
overall impact on the environment. It is anticipated that mortgage
proceeds will be used to retrofit properties to meet the stringent
efficiency standards required to access this lower MIP premium. For
properties that have already achieved a green building standard and
that are refinancing with this lower MIP premium, proceeds may be used
to complete further efficiency upgrades, and/or to retrofit to the
next-level green certification standards.
---------------------------------------------------------------------------
\4\ Except in the case of a 207/223(f) refinance or purchase
that has a current upfront capitalized MIP basis points of 100.
---------------------------------------------------------------------------
To qualify, upon application for FHA mortgage insurance, the owner
must evidence that the project has achieved, or the owner must certify
that it will pursue and achieve, an industry-recognized standard for
green building. Acceptable, independently verified standards include
the Enterprise Green Communities Criteria; U.S. Green Building
Council's LEED-H, LEED-H Midrise, LEED-NC, or LEED for Existing
Buildings: Operations & Maintenance; ENERGY STAR certification;
EarthCraft House; EarthCraft Multifamily; Earth Advantage New Homes;
Greenpoint Rated New Home; Greenpoint Rated Existing Home (Whole House
or Whole Building label); the National Green Building Standard (NGBS);
Passive Building Certification or EnerPHit Retrofits certification from
the Passive House Institute US (PHIUS), International Passive House
Association, or the Passive House Institute; and Living Building
Challenge Certification from the International Living Future Institute,
or other industry-recognized green building standards, in the sole
discretion of HUD's Office of Multifamily Production.
Further, the owner must certify that it has achieved, or will
pursue, achieve, and maintain a score of 75 or better on the 1-100
ENERGY STAR score, using EPA's Portfolio Manager. The reasonableness of
achieving and maintaining the specified, independent green building
standard, and the score of 75 or better in Portfolio Manager, must be
verified by the independent conclusion of the qualified assessor
preparing the physical condition assessment, and supported by the
physical condition assessment report and recommendations, ASHRAE level
II energy audit (required for existing structures only), and plans for
new construction, or rehabilitation, repairs, and operations and
maintenance. The physical condition assessment report submitted with
the mortgage insurance application must include a certification from
the architect, engineer, or energy auditor that the planned scope of
work is reasonably sufficient to achieve and maintain the specified
certification.
Additionally, the owner must submit to HUD evidence that the
specified, independent green building standard has been achieved, and
provide a copy of the Portfolio Manager report showing building
performance at or above 75, when those standards have been achieved,
and no more than 15 months after completion of new construction,
substantial rehabilitation or renovations or 15 months after break-even
occupancy. If not achieved, HUD may impose protocols to ensure the
owner brings the property into compliance, similar to protocols used by
REAC for unacceptable property standards. The owner must submit the
Portfolio Manager report annually to HUD showing that the property has
maintained its efficiency performance. Note that properties of less
than 20 units may qualify for this MIP rate by achieving an industry-
recognized standard for green building, as described above, but are
exempt from the requirement to achieve a score of 75 or better on the
1-100 ENERGY STAR score.
To ensure that the benefits of these MIP rates directly benefit the
properties and residents, lenders submitting applications for loans
using this MIP rate are limited in the total loan fees they may charge
on any loan greater than $2 million, to no more than 5 percent of the
insured loan amount. Loan fees include (a) origination and placement
fees as permitted by the MAP Guide; plus (b) trade profit, trade
premium or marketing gain earned on the sale of the GNMA security at a
value above par, even if the security sale is delayed until after
endorsement; minus (c) loan fees applied by the mortgagee to its legal
expenses incurred in connection with loan closing.
Change: In response to public comments, HUD makes the following
changes:
Deletes the phrase ``and maintain'' in reference to the
owner providing evidence that the project has achieved an industry-
recognized standard for green building.
Adds to the list of certifications Passive House
certifications, LEED for Existing Buildings: Operations & Maintenance,
and Living Building Challenge Certification, and clarifies that other
industry-recognized green building standards will be approved at the
discretion of HUD's Office of Multifamily Production.
Clarifies that a CNA provider may only certify a physical
condition assessment report, if appropriately credentialed, in their
capacity as architect, engineer, energy auditor, and/or approved
certifier under the specified green building standard.
Amends the time frame for providing the report showing
compliance with building performance after completion of new
construction, substantial rehabilitation, or renovations from no more
than 12 months to no more than 15 months. HUD also provides that such
report may be provided 15 months after break-even occupancy.
[[Page 18479]]
Requires that owners submit the Portfolio Manager report
annually to HUD showing that the property has maintained its efficiency
performance.
Provides that while small properties (under 20 units) must
meet one of the recognized independent green building/energy efficiency
standards in order to access the Green/Energy Efficient MIP rate, small
properties are exempt from the requirement to achieve a score of 75 or
better on the 1-100 ENERGY STAR score.
IV. MIPs for Certain FHA's Multifamily Mortgage Insurance Programs for
April 1, 2016
The chart below details the MIP rates for each rate category, and
each type of FHA multifamily mortgage insurance covered under this
notice. This notice does not change MIP rates for programs under FHA's
Office of Healthcare Programs, including health care facilities and
hospital insurance programs.
FHA Multifamily Mortgage Insurance Premiums By Rate Category
----------------------------------------------------------------------------------------------------------------
Current Apr 1, 2016,
upfront upfront Current Apr 1, 2016,
FHA Multifamily mortgage insurance program capitalized capitalized annual MIP annual MIP
MIP * basis MIP * basis basis points basis points
points points
----------------------------------------------------------------------------------------------------------------
MARKET RATE HOUSING............................. .............. Unchanged .............. Unchanged
207 Multifamily New Constr/Sub Rehab w/o LIHTC.. 70 70 70 70
207 Manufactured Home Parks w/o LIHTC........... 70 70 70 70
221(d)(4) New Constr/Sub Rehab w/o LIHTC........ 65 65 65 65
220 Urban Renewal Housing w/o LIHTC............. 70 70 70 70
213 Cooperative................................. 70 70 70 70
207/223(f) Refi or Purchase for Apts. w/o LIHTC. 100 100 60 60
223(a)(7) Refi of Apts. w/o LIHTC............... 50 50 50 50
231 Elderly Housing w/o LIHTC................... 70 70 70 70
241(a) Supplemental Loans for Apts. coop w/o 95 95 95 95
LIHTC..........................................
BROADLY AFFORDABLE HOUSING...................... .............. 25 .............. 25
207 New Constr/Sub Rehab w 90 percent+ LIHTC, or 45 25 45 25
90 percent+ Section 8..........................
207 Manufactured Home Parks w 90 percent+ LIHTC, 45 25 45 25
or 90 percent+ Section 8.......................
221(d)(4) New Constr/Sub Rehab w 90 percent+ 45 25 45 25
LIHTC, or 90 percent+ Section 8................
220 Urban Renewal Housing w 90 percent+ LIHTC, 45 25 45 25
or 90 percent+ Section 8.......................
207/223(f) Refi or Purchase w 90 percent+ LIHTC, 100 25 45 25
or 90 percent+ Section 8.......................
223(a)(7) Refi w 90 percent+ LIHTC, or 90 50 25 45 25
percent+ Section 8.............................
231 Elderly Housing w 90 percent+ LIHTC, or 90 45 25 45 25
percent+ Section 8.............................
241(a) for Apts./coop w 90 percent+ LIHTC, or 90 45 25 45 25
percent+ Section 8.............................
Section 542(b) Risk-Sharing **.................. 50 25 50 25
Section 542(c ) Risk-Sharing **................. 50 25 50 25
AFFORDABLE: INCLUSIONARY VOUCHERS............... .............. 35 .............. 35
207 New Constr/Sub Rehab w Inclusionary Zoning, 45-70 35 45-70 35
or 10 percent-90 percent LIHTC, or 10 percent-
90 percent Section 8...........................
207 Manufactured Home Parks w Inclusionary 45-70 35 45-70 35
Zoning, or 10 percent-90 percent LIHTC, or 10
percent-90 percent Section 8...................
221(d)(4) New Constr/Sub Rehab w Inclusionary 45-65 35 45-65 35
Zoning, or 10 percent-90 percent LIHTC, or 10
percent-90 percent Section 8...................
220 Urban Renewal Housing w Inclusionary Zoning, 45-70 35 45-70 35
or 10 percent-90 percent LIHTC, or 10 percent-
90 percent Section 8...........................
207/223(f) Refi or Purchase w Inclusionary 100 35 45-60 35
Zoning, or 10 percent-90 percent LIHTC, or 10
percent-90 percent Section 8...................
223(a)(7) Refinance of Apts. w Inclusionary 50 35 45-50 35
Zoning, or 10 percent-90 percent LIHTC, or 10
percent-90 percent Section 8...................
231 Elderly Housing w Inclusionary Zoning, or 10 45-70 35 45-70 35
percent-90 percent LIHTC, or 10 percent-90
percent Section 8..............................
241(a) Supplementals for Apts./coop w Inclusion 45-95 35 45-95 35
Zoning, or 10 percent-90 percent LIHTC, or 10
percent-90 percent Section 8...................
GREEN/ENERGY EFFICIENT HOUSING.................. .............. 25 .............. 25
207 Multifamily New Construction/Sub Rehab w 45-70 25 45-70 25
Green..........................................
207 Manufactured Home Parks with Green.......... 45-70 25 45-70 25
221(d)(4) New Constr/Sub Rehab w Green.......... 45-65 25 45-65 25
220 Urban Renewal Housing w Green............... 45-70 25 45-70 25
207/223(f) Refi or Purchase for Apts. w Green... 100 25 45-60 25
223(a)(7) Refi of Apts. w Green................. 50 25 45-50 25
231 Elderly Housing w Green..................... 45-70 25 45-70 25
[[Page 18480]]
241(a) Supplemental Loans for Apts./coop w Green 45-95 25 45-95 25
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* Upfront premiums for multifamily refinancing programs are capitalized and based on the first year's annual MIP
for the applicable rate category (except market rate 223(f), where the upfront rate remains at 100 basis
points). Upfront premiums for multifamily new construction and substantial rehabilitation programs insuring
advances are capitalized and based on the annual MIP for the applicable rate category for the entire
construction period, rounded up to the nearest whole year.
** Under the Sections 542(b) and 542(c) Risk-Sharing programs, the MIP collected by HUD is currently, and will
continue to be, proportionate to the percentage of risk assumed by FHA, as follows:
----------------------------------------------------------------------------------------------------------------
April 1, 2016, upfront
Program FHA percent capitalized MIP basis April 1, 2016, annual
of risk share points (bps) MIP basis points (bps)
----------------------------------------------------------------------------------------------------------------
542(b).................................... 50 percent 12.5 (25 bps x 50 12.5 (25 bps x 50
percent). percent).
542(c).................................... 50 percent 12.5 (25 bps x 50 12.5 (25 bps x 50
percent). percent).
75 percent 18.75 (25 bps x 75 18.75 (25 bps x 75
percent). percent).
90 percent 22.5 (25 bps x 90 22.5 (25 bps x 90
percent). percent).
----------------------------------------------------------------------------------------------------------------
V. Regulatory Waiver for the 542(c) Risk-Sharing Program
Section 106 of the Department of Housing and Urban Development
Reform Act of 1989 (the HUD Reform Act) (42 U.S.C. 3535(q)) requires
HUD to publish waivers in the Federal Register. To allow for the FY
2016 MIP changes covered in this notice to apply to the 542(c) Risk-
Sharing program, authorized under the Housing and Community Development
Act of 1992, HUD must waive Sec. Sec. [thinsp]266.600, 266.602, and
266.604, which currently prescribe percentages for calculating the MIP
under the 542(c) Risk-Sharing program. HUD believes these set
percentages are no longer appropriate for the 542(c) Risk-Sharing
program and issued a proposed rule on March 8, 2016, entitled ``Section
542(c) Housing Finance Agencies Risk-Sharing Program: Revisions to
Regulations'' (81 FR 12051), which would permit MIP changes for the
Risk-Sharing program to be published through Federal Register notice.
All loans originated under the Risk-Sharing programs are for affordable
housing purposes with recorded affordability restrictions, and
therefore qualify as Broadly Affordable housing. HUD believes that the
542(c) Risk-Sharing program, like the other identified Multifamily
Housing programs, should be eligible for the MIP changes in this
notice. Therefore, HUD is issuing this regulatory waiver of Sec. Sec.
[thinsp]266.600, 266.602, and 266.604 for FY 2016 and FY 2017.
Commitments issued or reissued for 542(c) Risk-Sharing program
beginning April 1, 2016, through FY 2017 will be eligible for these MIP
changes.
VI. Environmental Impact
This notice involves the establishment of rate or cost
determinations and related external administrative requirements that do
not constitute a development decision affecting the physical condition
of specific project areas or building sites. Accordingly, under 24 CFR
50.19(c)(6), this notice is categorically excluded from environmental
review under the National Environmental Policy Act of 1969 (42 U.S.C.
4321).
Dated: March 28, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
Dated: March 28, 2016.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-07405 Filed 3-30-16; 8:45 am]
BILLING CODE 4210-67-P
