[Federal Register Volume 69, Number 162 (Monday, August 23, 2004)]
[Notices]
[Pages 51932-51933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19221]



[[Page 51931]]

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Part III





Department of Housing and Urban Development





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HUD-2004-0005; Changes in Certain Multifamily Mortgage Insurance 
Premiums; Notice

  Federal Register / Vol. 69, No. 162 / Monday, August 23, 2004 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4679-N-08]


HUD-2004-0005; 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 changes the 
mortgage insurance premiums (MIP) for the Section 221(d)(4) and the 
Section 232 Federal Housing Administration (FHA) mortgage insurance 
programs whose commitments will be issued in Fiscal Year (FY) 2005.

DATES: Comment Due Date: September 22, 2004.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-0500. Interested persons may also submit 
comments electronically through either:
     The Federal eRulemaking Portal at: http://www.regulations.gov; or
     The HUD electronic Web site at: http://www.epa.gov/feddocket. Follow the link entitled ``View Open HUD Dockets.'' 
Commenters should follow the instructions provided on that site to 
submit comments electronically.
    Facsimile (FAX) comments are not acceptable. In all cases, 
communications must refer to the docket number and title. All comments 
and communications submitted will be available, without revision, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Copies are also available for inspection and downloading 
at http://www.epa.gov/feddocket.

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 MIPs in multifamily insured housing programs. These 
regulations are codified at 24 CFR 207.252, 207.252a, and 207.254.
    This Notice announces a change in the MIP for programs authorized 
under Sections 221(d)(4), 232, and 241(a) of the National Housing Act 
for FY 2005 (12 U.S.C. 1715l(d)(4), 1715w, and 1715z-6 respectively). 
The mortgage insurance premium for the Section 221(d)(4) new 
construction and substantial rehabilitation multifamily apartment 
program without low-income housing tax credits has been lowered from 50 
basis points to 45 basis points. The mortgage insurance premium for the 
232 new construction and substantial rehabilitation of health care 
facilities and 241(a) supplemental loans for Section 232 projects has 
been increased from 50 basis points to 57 basis points. The effective 
date of these changes is October 1, 2004.
    Certain project mortgages with low-income housing tax credits 
(LIHTC) require a 50 basis point MIP. Thus, an application under 
Section 221(d)(4), which requires 45 basis points without LIHTC, 
requires 50 basis points with LIHTC. In the rare occasion when the new 
construction of an assisted living facility has LIHTC, the MIP is 50 
basis points instead of 57 basis points. Under the Department of 
Housing and Urban Development Reform Act of 1989, Pub. L. 101-235 
(Approved December 15, 1989) and HUD's implementing instructions, a 
sponsor is required to submit a certification regarding governmental 
assistance including low-income housing tax credits with all mortgage 
insurance applications.
    Whether or not LIHTC are involved, the 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) supplemental loans for additions or 
improvements to existing apartments. The MIP for Sections 207, 213, 
220, 223(a)(7), 207 pursuant to 223(f), 231, 232 pursuant to 223(f), 
234(d), 242 and Title XI remain unchanged at 50 basis points.
    The mortgage insurance premium for risk-sharing applications under 
Sections 542(b) and 542(c) of the Housing and Community Development Act 
of 1992 remains at 50 basis points. The premium is shared by the 
Participating Entity or by the Housing Finance Agency in proportion to 
the risk assumed by the Entity or Agency. Premiums and risk under 
Section 542(b) are shared equally. The premiums for 542(c) are 
contained in 24 CFR 266.604.
    The mortgage insurance premiums to be in effect for FHA firm 
commitments issued, amended, or reissued in FY 2005 are shown in the 
table below:

                Fiscal Year 2005 Multifamily Loan Program
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                                                                  Basis
                                                                 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....................        45
Section 221(d)(4)--Low-Income Housing Tax Credits.............        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...........................        57
Section 232--Low-Income Housing Tax Credits...................        50
Section 232 pursuant to Section 223(f)--Purchase or Refinance        *50
 Health Care Facility.........................................
Section 234(d)--Condominium Housing...........................        50
Section 241(a)--Additions & Improvements for Apartments.......        80
Section 241(a)--Additions & Improvements for Health Care              57
 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.


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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 for a Section 
221(d)(4) loan, 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, 2004. If the 
initial endorsement has occurred, the MIP cannot be changed.

B. Extension of Outstanding 50 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 in accordance with Mortgagee Letter 03-21, ``FHA Policies 
for Controlling Multifamily Firm Commitments and Credit Subsidy,'' 
dated December 3, 2003.

C. Reprocessing of Outstanding 50 Basis Points Firm Commitments

     FHA will consider requests from mortgagees to reprocess 
outstanding firm commitments at the lower mortgage insurance premium 
for Section 221(d)(4) once the new premiums become effective on October 
1, 2004:
    1. Outstanding commitments with initial 60-day expiration dates on 
or after the effective date of this MIP notice.
     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 of the commitment.
     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 and other exhibits may be 
required from the mortgagee depending on the age of the appraisal and 
the age of the commitment. (See Mortgagee Letter 03-21) 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 50 Basis Points Firm Commitments Under Section 
221(d)(4)

    FHA will consider mortgagee's requests, 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 50 basis points commitments on or 
after October 1, 2004; 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 and Mortgagee Letter 03-21.
    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

    In FY 2005, the same three programs will require credit subsidy as 
in FY 2004: 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 (additions or improvements for 
apartments) loans for additions or improvements to existing apartments 
only.

    Dated: August 13, 2004.
Sean Cassidy,
General Deputy Assistant Secretary for Housing.
[FR Doc. 04-19221 Filed 8-20-04; 8:45 am]
BILLING CODE 4210-27-P