[Federal Register Volume 68, Number 194 (Tuesday, October 7, 2003)]
[Notices]
[Pages 57922-57923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25324]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-07]


Changes in Certain Multifamily Mortgage Insurance Premiums

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice reissues as final the notice published on July 1, 
2003, for public comment. That notice lowered the mortgage insurance 
premiums (MIP) for certain Federal Housing Administration (FHA) 
insurance programs whose commitments will be issued in Fiscal Year (FY) 
2004. HUD received no comments from the public on that notice.

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 toll-
free Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

Background

    On March 17, 2003 (68 FR 12792), HUD published a final rule on 
``Mortgage Insurance Premiums in Multifamily Housing Programs,'' which 
revised the regulatory system for establishing the MIP. Instead of 
setting the MIP at a specific rate, the Secretary is permitted to 
charge 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 March 17, 2003, final rule stated that HUD would 
provide a 30-day period for public comment on future notices changing 
mortgage insurance premiums in multifamily insured housing programs.
    Pursuant to that procedure, this notice lowers 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), and 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 in effect for FHA firm commitments 
issued, amended, or reissued in FY 2004, are shown in the table below:

------------------------------------------------------------------------
                            Fiscal Year 2004
-------------------------------------------------------------------------
                                                                  Basis
                   Multifamily loan program                      points
------------------------------------------------------------------------
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

[[Page 57923]]

 
Section 241(a)--Additions & Improvements for Health Care              50
 Facilities...................................................
Section 242--Hospitals........................................        50
Title XI--Group Practice......................................       50
------------------------------------------------------------------------
*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 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: September 25, 2003.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 03-25324 Filed 10-6-03; 8:45 am]
BILLING CODE 4210-27-P