[Federal Register Volume 66, Number 127 (Monday, July 2, 2001)]
[Notices]
[Pages 35074-35075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16595]



  Federal Register / Vol. 66, No. 127 / Monday July 2, 2001 / Notices  

[[Page 35074]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-02]


Increase in Certain FHA Multifamily Mortgage Insurance Premiums

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

ACTION: Notice.

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SUMMARY: This notice sets new mortgage insurance premiums (MIPs) in 
multifamily housing programs pursuant to the interim rule entitled 
``Mortgage Insurance Premiums in Multifamily Housing Programs'' 
published elsewhere in today's Federal Register. This notice raises the 
multifamily insurance premium to 80 basis points in certain FHA 
multifamily programs where the premium was previously set at 50 basis 
points.

DATES: Effective Date: August 1, 2001.

ADDRESSES: Interested persons are invited to submit comments and 
responses to the Rules Docket Clerk, Office of the General Counsel, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street SW., Washington, DC 20410-0500. Communications should refer to 
the above docket number and title. Facsimile (FAX) responses are not 
acceptable. A copy of each response will be available for public 
inspection and copying during regular business hours (7:30 a.m. to 5:30 
p.m. eastern time) at the above address.

FOR FURTHER INFORMATION CONTACT: Michael McCullough, Director, Office 
of Multifamily Development, U.S. Department of Housing and Urban 
Development, 451 7th Street, SW., Washington, DC 20410, (202) 708-1142. 
Hearing or speech-impaired individuals may access these numbers via TTY 
by calling the Federal Information Relay Service at (800) 877-8339 
(this is a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Introduction

    HUD's interim rule titled ``Mortgage Insurance Premiums in 
Multifamily Housing Programs,'' published elsewhere in today's Federal 
Register (``the interim rule'') revises HUD's regulations at 24 CFR 
207.252 and 207.252a, and adds a new Sec. 207.254 to permit the 
Secretary of HUD to set the mortgage insurance premium (MIP) at a rate 
between one-fourth of one percent and one percent of the outstanding 
principal balance per annum. With this change, these revised 
regulations, which are incorporated by reference in the regulations of 
each of the multifamily programs listed in this Notice, reflect the 
statutory authority to set MIP interest rates as authorized in section 
203(c)(1) of the National Housing Act. Until this change, the annual 
MIP had been set by regulations at one-half of one percent for almost 
all of HUD's FHA multifamily mortgage insurance programs.
    The interim rule also provides notice that the Secretary will 
increase the MIP for certain multifamily insured mortgage programs. The 
new MIP will take effect upon the effective date of the interim rule, 
which is 30 days after publication in the Federal Register. This Notice 
sets the MIP for the programs listed in the table below as of the 
effective date of the interim rule.
    As of the effective date of the interim rule, the multifamily 
mortgage insurance premiums shall be those premiums as provided in the 
following table:

------------------------------------------------------------------------
                                                      Annual mortgage
             Multifamily Loan Program                insurance premiums
                                                          charged
------------------------------------------------------------------------
Section 207--Multifamily Housing--new                               .8%
 construction/substantial rehabilitation.........
Section 207--Manufactured Home Parks.............                   .8%
Section 220--Housing In Urban Renewal Areas......                   .8%
Section 221(d)(3) and 221(d)(4)--Moderate Income                    .8%
 Housing.........................................
Section 223(a)(7) Refinancing of Insured                            .5%
 Multifamily Project.............................
Section 223(d) Operating Loss Loans, both                           .8%
 apartments and health care facilities...........
Section 207/223(f) Purchase or Refinance--housing                   .5%
Section 231 Housing for the Elderly..............                   .8%
Section 232 Health Care Facilities...............                   .5%
Section 232 pursuant to Section 223(f) Purchase                     .5%
 or Refinance Health Care Facilities.............
Section 234(d) Condominium Housing...............                  .5 %
Section 241(a) Additions & Improvements for                         .8%
 Apartments......................................
Section 241(a) Additions & Improvements for                         .5%
 Health Care Facilities..........................
Section 242--Hospitals...........................                   .5%
Title XI--Group Practice.........................                   .5%
HOPE VI Projects--[207, 220, 221(d)(4) and 231]..                   .8%
Tax Credit Projects [207, 220, 221(d)(4) and 231]                   .5%
 without HOPE VI.................................
------------------------------------------------------------------------

    The multifamily mortgage insurance premiums are increased to 80 
basis points from 50 basis points for the following programs, as shown 
in the table, above. The programs are the same as those which require 
credit subsidy in FY 2001, as specified in Mortgagee Letter 01-10: 
Section 221(d)(3) apartments or cooperatives; sections 207, 220, 
221(d)(4) and 231 HOPE VI transactions with or without Low Income 
Housing Tax Credits; New construction/substantial rehabilitation 
apartments financed without Low Income Housing Tax Credits under 
sections 207, 220, 221(d)(4) and 231; section 207 manufactured home 
parks, section 241(a) supplemental loans for additions or improvements 
of apartments, with or without Low Income Housing Tax Credits, and 
section 223(d) operating loss loans on apartments and health care 
facilities.
    The mortgage insurance premium remains at 50 basis points for 
mortgages insured under sections 223(a)(7), 207 pursuant to 223(f), 
232, 232 pursuant to 223(f), 234(d), 241(a) for health care facilities, 
242, Title XI, and for new construction/substantial rehabilitation 
under sections 207, 220, 221(d)(4), and 231 with Tax Credits, but 
without HOPE VI.

For Programs Subject to the Increased Premiums

    The following rules are applicable for those programs, shown in the 
table above, where the mortgage insurance premium is increased to 80 
basis points.

[[Page 35075]]

A. Firm Commitments Issued or Reissued on or After the Effective Date 
of This Notice
    The mortgagee, upon the initial endorsement of the mortgage for 
insurance, shall pay to the Commissioner a first mortgage insurance 
premium equal to 0.8 percent of the original face amount of the 
mortgage.
    (a) If the date of the first principal payment is more than one 
year following the date of such initial endorsement, the mortgagee, 
upon the anniversary of such insurance date, shall pay a second premium 
equal to 0.8 percent of the original face amount of the mortgage. On 
the date of the first principal payment, the mortgagee shall pay a 
third premium equal to 0.8 percent of the average outstanding principal 
obligation of the mortgage for the following year which shall be 
adjusted so as to accord with such date and so that the aggregate of 
the three premiums shall equal the sum of:
    (1) One percent of the average outstanding principal obligation of 
the mortgage for the year following the date of initial insurance 
endorsement, and
    (2) 0.8 percent per annum of the average outstanding principal 
obligation for the period following the first anniversary of the date 
of initial insurance endorsement to one year following the date of the 
first principal payment.
    (b) If the date of the first principal payment is one year, or less 
than one year following the date of the such initial insurance 
endorsement, the mortgagee, upon such first principal date, shall pay a 
second premium of 0.8 percent of the average outstanding principal 
obligation of the mortgage for the following year which shall be 
adjusted to accord with such date and so that the aggregate of the said 
two premiums shall equal the sum of:
    (1) One percent per annum of the average outstanding principal 
obligation of the mortgage for the period from the date of initial 
insurance endorsement to the date of first principal payment, and
    (2) 0.8 percent of the average outstanding principal obligation of 
the mortgage for the year following the date of the first principal 
payment.
    (c) Where the credit instrument is initially and finally endorsed 
for insurance pursuant to a Commitment to Insure Upon Completion, the 
mortgagee on the date of the first principal payment shall pay a second 
premium equal to 0.8 percent of the average outstanding principal 
obligation of the mortgage for the year following such first principal 
payment date which shall be adjusted so as to accord with such date and 
so that the aggregate of the said two premiums shall equal the sum of 
0.8 percent per annum of the average outstanding principal obligation 
of the mortgage for the period from the date of the insurance 
endorsement to one year following the date of the first principal 
payment.
    Until the mortgage is paid in full, or until receipt by the 
Commissioner of an application for insurance benefits, or until the 
contract of insurance is otherwise terminated with the consent of the 
Commissioner, the mortgagee, on each anniversary of the date of the 
first principal payment, shall pay an annual mortgage insurance premium 
equal to 0.8 percent of the average outstanding principal obligation of 
the mortgage for the year following the date on which such premium 
becomes payable.
B. For Those Programs Where the Premium Remains at 0.5 Percent
    For those programs where the premium is unchanged at 0.5 percent, 
according to the chart, above, the mortgage insurance premium is in 
accordance with paragraph 1(a), (b),(c), and (d), above, except that 
wherever 0.8 percent appears, the number 0.5 percent should be inserted 
in lieu of 0.8 percent.

Transition Rules

    The interim rule on this subject published elsewhere in today's 
Federal Register includes transition provisions. There may be changes 
in those transition provisions due to potential changes in law being 
contemplated. HUD will advise on whether the transition provisions in 
the interim rule remain in effect or are changed in a future Notice.

Credit Subsidy

    Mortgagee Letters will be issued from time to time to advise 
mortgages of any requirements for credit subsidy, and the availability 
of credit subsidy. The increase in the MIP substantially reduces the 
requirement for credit subsidy in FY 2001, and for FY 2002 it is 
expected that only three programs will require credit subsidy: section 
221(d)(3) for nonprofits and certain other borrowers for new 
construction or substantial rehabilitation, section 223(d) for 
operating loss loans for housing and health care facilities, and 
section 241(a) for supplemental loans for additions or improvements to 
existing apartments.

Refund of Application Fees

    The Multifamily Hubs or Program Centers will refund FHA application 
fees without question to mortgagees who wish to surrender outstanding 
commitments or to withdraw their pending applications because of the 
increase in MIP. The refund policy includes applications in the SAMA, 
Feasibility, Conditional Commitment (Section 241(a) only) stages as 
well as the firm commitment.

    Dated: June 26, 2001.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 01-16595 Filed 6-29-01; 8:45 am]
BILLING CODE 4210-27-P