[Federal Register Volume 67, Number 169 (Friday, August 30, 2002)]
[Notices]
[Pages 55859-55860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22158]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-04]


Reduction 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 lowers the mortgage insurance premiums (MIPs) for 
certain Federal Housing Administration (FHA) multifamily mortgage 
insurance programs whose commitments will be issued in Fiscal Year 
2003, and republishes others at the rate that was in effect in Fiscal 
Year 2002.

DATES: Comments Due Date: September 30, 2002.

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 Seventh 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:

I. Background

    The interim rule on ``Mortgage Insurance Premiums in Multifamily 
Programs,'' published on July 2, 2001, at 66 Federal Register 35070, 
revised previous regulations that set mortgage insurance premiums (MIP) 
at a specific figure. The revision permits the Secretary to change an 
MIP within the full range of HUD's statutory authority of one fourth of 
one percent to one percent. This Notice announces, effective October 1, 
2002, the mortgage insurance premiums to be in effect for FHA firm 
commitments issued, amended or reissued in Fiscal Year 2003, which are 
shown in the table below:

------------------------------------------------------------------------
                                                          FY 2003  basis
                Multifamily loan program                      points
------------------------------------------------------------------------
Section 207--Multifamily Housing--New Construction/                  61
 Substantial Rehabilitation............................
Section 207--Manufactured Home Parks...................              61
Section 220--Housing In Urban Renewal Areas............              61
Section 221(d)(3)--Moderate Income Housing.............              80
Section 221(d)(4)--Moderate Income Housing.............              57
Section 223(a)(7)--Refinancing of Insured Multifamily                50
 Project...............................................
Section 223(d)--Operating Loss Loans...................              80
Section 207/223(f)--Purchase or Refinance Housing......              50
Section 231--Housing for the Elderly...................              61
Section 232--Health Care Facilities....................              50
Section 232 pursuant to Section 223(f)--Purchase or                  50
 Refinance Health Care Facilities......................
Section 234(d)--Condominium Housing....................              50
Section 241(a)--Additions & Improvements for Apartments              80
Section 241(a)--Additions & Improvements for Health                  50
 Care Facilities.......................................
Section 242--Hospitals.................................              50
Title XI--Group Practice...............................              50
HOPE VI Projects with or without LIHTC--[221(d)(4)]....              57
HOPE VI Projects with or without LIHTC--[207, 220 and                61
 231]..................................................
Low Income Housing Tax Credit Projects-- 221(d)(4),                  50
 207, 220, and 231 without HOPE VI.....................
------------------------------------------------------------------------

II. Applicable Mortgage Insurance Premium Regulations

    The MIP regulations are contained in 24 CFR 207.252, 207.252(a), 
and 207.254, published at 66 FR 35072 (July 2, 2001). This Notice is 
published in accordance with the procedures stated in those 
regulations.

III. Transition Guidelines

A. General

    If a firm commitment has been issued at a higher mortgage insurance 
premium (MIP) and FHA has not initially endorsed the note, the lender 
may request the field office to reprocess the commitment at the lower 
MIP and issue an amended commitment on or after October 1, 2002. If the 
initial endorsement has occurred, the MIP cannot be changed.

B. Extension of Outstanding 80 basis point Firm Commitments

    FHA may extend outstanding firm commitments when the HUB/Program 
Center determines that the underwriting conclusions (rents, expenses, 
construction costs, mortgage amount and cash required to close) are 
still valid.

C. Reprocessing of Outstanding 80 basis point Firm Commitments

    FHA will consider requests from mortgagees to reprocess outstanding 
firm commitments at the lower mortgage insurance premium once the new 
premiums become effective in Fiscal Year 2003:
    1. Outstanding commitments with initial 60 day expiration dates on 
or after the effective date of the MIP Notice. FHA Multifamily HUB/
Program Center staff will simply reprocess these cases to reflect the 
impact of the lower MIP and issue amended commitments;
    2. Outstanding commitments with initial expiration dates prior to 
the effective date of the MIP Notice which have pending extension 
requests or have had extensions granted by FHA beyond the initial 60 
day period. These cases will require more extensive reprocessing by FHA 
staff. Reprocessing will include

[[Page 55860]]

an updated FHA field staff analysis and review of rents, expenses, 
construction costs, particularly considering any changes in Davis-Bacon 
wage rates and cash required to close. (An updated appraisal may be 
required from the mortgagee depending on the age of the appraisal.) If 
reprocessing results in favorable underwriting conclusions, HUB/Program 
Center staff will issue amended commitments at the new MIP.

D. Reopening of Expired 80 basis point Firm Commitments

    FHA will consider requests from mortgagees, which requests may be 
either updated Traditional Application Processing (TAP) firm commitment 
applications or updated Multifamily Accelerated Processing (MAP) 
applications with updated exhibits, to reopen expired 80 basis point 
commitments on or after the effective date of the MIP Notice, provided 
that the reopening requests are received within 90 days of the 
expiration of the commitments and include the $.50 per thousand of 
requested mortgage reopening fee. Reopening requests will be 
reprocessed by FHA field staff under the instructions in paragraph C.2 
above.
    After expiration of the 90 day reopening period, mortgagees are 
required to submit new applications with the $3 per thousand 
application fee. (MAP applications must start at the preapplication 
stage.)

Credit Subsidy

    Mortgagee Letters will be issued from time to time to advise 
mortgagees of any requirements for credit subsidy, and the availability 
of credit subsidy. In Fiscal Year 2003, it is anticipated that only 
three programs will require credit subsidy: Section 221(d)(3) for 
nonprofit sponsors and cooperatives for new construction or substantial 
rehabilitation, Section 223(d) for operating loss loans for both 
apartments and health care facilities, and Section 241(a) for 
supplemental loans for additions or improvements to existing apartments 
only. FHA will not issue amended commitments for increased mortgage 
amounts nor obligate additional credit subsidy for projects requiring 
credit subsidy in Fiscal Year 2003.

    Dated: August 26, 2002.
Sean Cassidy,
General Deputy Assistant Secretary for Housing-Federal Housing 
Commissioner.
[FR Doc. 02-22158 Filed 8-29-02; 8:45 am]
BILLING CODE 4210-27-P