[Federal Register Volume 68, Number 126 (Tuesday, July 1, 2003)]
[Notices]
[Pages 39444-39445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16595]



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Part VI





Department of Housing and Urban Development





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Changes in Certain Multifamily Mortgage Insurance Premiums; Notice

  Federal Register / Vol. 68, No. 126 / Tuesday, July 1, 2003 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-06]


Changes in Certain Multifamily Mortgage Insurance Premiums

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

ACTION: Notice.

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SUMMARY: In accordance with HUD regulations, this Notice lowers the 
mortgage insurance premiums (MIP) for certain Federal Housing 
Administration (FHA) mortgage insurance programs whose commitments will 
be issued in Fiscal Year (FY) 2004.

DUE DATE: Comment Due Date: July 31, 2003.

ADDRESSES: Interested persons are invited to submit written comments 
regarding this rule to the Regulations Division, Room 10276, Office of 
General Counsel, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Comments should refer 
to the above docket number and title. A copy of each comment submitted 
will be available for public inspection and copying between 8 a.m. and 
5 p.m., weekdays, at the above address. Facsimile (FAX) comments will 
not be accepted.

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

SUPPLEMENTARY INFORMATION:

Introduction

    On March 17, 2003 (68 FR 12792), HUD published a final rule on 
``Mortgage Insurance Premiums in Multifamily Housing Programs,'' which 
adopted, without change, the interim rule published on July 2, 2001 (66 
FR 35072). The final and interim rule revised the regulatory system for 
establishing the MIP. Instead of setting the MIP at a specific rate, 
the Secretary is permitted to change an MIP within the full range of 
HUD's statutory authority of one fourth of one percent to one percent 
through a notice, as provided in section 203(c)(1) of the National 
Housing Act (the Act) (12 U.S.C. 1709(c)(1)). The final rule states 
that HUD will provide a 30-day period for public comment on future 
notices changing mortgage insurance premiums in multifamily insured 
housing programs. These regulations are codified at 24 CFR 207.252, 
207.252a, and 207.254.
    This Notice announces the lowering of mortgage insurance premiums 
in FY 2004 to 50 basis points for multifamily programs authorized under 
sections 207, 220, and 221(d)(4) of the Act without low-income housing 
tax credits, section 231 of the Act, and insured programs with HOPE VI 
with or without low-income housing tax credits. The effective date of 
these changes is October 1, 2003. Multifamily programs under the 
following sections of the Act will remain at 80 basis points and will 
continue to require a credit subsidy obligation: Section 221(d)(3) for 
nonprofit and cooperatives for new construction or 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. The MIP for sections 
223(a)(7), 207 pursuant to 223(f), 232, 232 pursuant to 223(f), 242, 
and 241(a) of the Act for health care facilities, Title XI, and low-
income housing tax credit projects remain unchanged at 50 basis points.
    The mortgage insurance premiums to be in effect for FHA firm 
commitments issued, amended, or reissued in FY 2004 are shown in the 
table below:

                            Fiscal Year 2004
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                                                                  Basis
                   Multifamily loan program                      points
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Section 207--Multifamily Housing--New Constr/Sub. Rehab.......        50
Section 207--Manufactured Home Parks..........................        50
Section 220--Housing In Urban Renewal Areas...................        50
Section 221(d)(3)--Moderate Income Housing....................        80
Section 221(d)(4)--Moderate Income Housing....................        50
Section 223(a)(7)--Refinancing of Insured Multifamily Project.        50
Section 223(d)--Operating Loss Loans..........................        80
Section 207 pursuant to 223(f)--Purchase or Refinance Housing.      * 50
Section 213--Cooperatives.....................................        50
Section 231--Housing for the Elderly..........................        50
Section 232--Health Care Facilities...........................        50
Section 232 pursuant to Section 223(f)--Purchase or Refinance       * 50
 Health Care..................................................
Section 234(d)--Condominium Housing...........................        50
Section 241(a)--Additions & Improvements for Apartments.......        80
Section 241(a)--Additions & Improvements for Health Care              50
 Facilities...................................................
Section 242--Hospitals........................................        50
Title XI--Group Practice......................................       50
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* First Year MIP for these programs remain at 100 basis points.

Applicable Mortgage Insurance Premium Procedures

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

Transition Guidelines

A. General

    If a firm commitment has been issued at a higher MIP, and FHA has 
not initially endorsed the note, the lender may request the field 
office to reprocess the commitment at the lower MIP and reissue the 
commitment on or after October 1, 2003. If the initial endorsement has 
occurred the MIP cannot be changed.

B. Extension of Outstanding 57 and 61 Basis Points Firm Commitments

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

C. Reprocessing of Outstanding 57 and 61 Basis Points 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 FY 2004:
    1. Outstanding commitments with initial 60-day expiration dates on 
or after the effective date of this MIP notice.
    [sbull] FHA Multifamily Hub/Program Center staff will simply 
reprocess these cases to reflect the impact of the lower MIP and 
reissue commitments with a new date.
    2. Outstanding commitments with initial expiration dates prior to 
the effective date of this MIP notice which have pending extension 
requests or have had extensions granted by FHA beyond the initial 60-
day period.
    [sbull] These cases will require more extensive reprocessing by FHA 
staff. Reprocessing will include an updated FHA field staff analysis 
and review of

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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 reissue 
commitments with a new date at the new MIP.

D. Reopening of Expired 57 or 61 Basis Points Firm Commitments

    FHA will consider requests from mortgagees, which may be either 
updated Traditional Application Processing (TAP) firm commitment 
applications or updated Multifamily Accelerated Processing (MAP) 
applications with updated exhibits, to reopen expired 57 or 61 basis 
points 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 pre-application 
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 FY 2004, the same three programs will require 
credit subsidy as in FY 2003: Section 221(d)(3) for nonprofit 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 FY 
2004.

    Dated: June 24, 2003.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

Sean Cassidy,
General Deputy Assistant Secretary for Housing.
[FR Doc. 03-16595 Filed 6-30-03; 8:45 am]
BILLING CODE 4210-27-P