[Federal Register Volume 77, Number 158 (Wednesday, August 15, 2012)]
[Notices]
[Pages 49007-49011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20045]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5634-N-02]


Changes in Certain Multifamily Housing and Health Care Facility 
Mortgage Insurance Premiums for Fiscal Year (FY) 2013

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

ACTION: Notice.

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SUMMARY: On April 10, 2012, HUD announced increases to mortgage 
insurance premiums (MIPs) for certain Federal Housing Administration 
(FHA) Multifamily Housing, Health Care Facilities, and Hospital 
Mortgage Insurance programs for commitments to be issued or reissued in 
FY 2013, and solicited public comment on the announced increases. In 
the April 2012, notice, HUD submitted that the MIP increases would not 
only provide additional protection for the General Insurance and 
Special Risk Insurance (GI/SRI) fund and increase receipts to the 
Treasury, but would also encourage private lending to return to the 
market by ensuring FHA is not under-pricing its risk. The April 2012 
notice also announced that a positive credit subsidy obligation will 
not be required in FY 2013 for loans under any of the active mortgage 
insurance programs for multifamily housing or health care facilities.
    This notice announces that the proposed MIP increases will be 
implemented in FY 2012. This notice also addresses the public comments 
received in response to the announced MIP increases.

DATES: Effective Date: The revised MIP will be effective for any firm 
commitments issued or reissued on or after October 1, 2012, with the 
exception of those transaction for which firm commitment applications 
were submitted prior to June 1, 2012.

FOR FURTHER INFORMATION CONTACT: Dan Sullivan, Acting Director, Office 
of Multifamily Housing Development, Office of Housing, Department of 
Housing and Urban Development, 451 7th Street SW., Washington, DC 
20410-8000; telephone: 202-402-6130 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access these numbers 
through TTY by calling the Federal Relay Service at 800-877-8339 (this 
is a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background

    In accordance with HUD's mortgage insurance regulation at 24 CFR 
207.254, HUD solicited public comment on changes in MIP for its 
multifamily mortgage insurance programs before the changes are adopted 
for a new fiscal year. HUD's regulation at 24 CFR 207.254 provides as 
follows:

    Notice of future premium changes will be published in the 
Federal Register. The Department will propose MIP changes for 
multifamily mortgage insurance programs and provide a 30-day public 
comment period for the purpose of accepting comments on whether the 
proposed changes are appropriate.

    In accordance with this regulation, HUD published on April 10, 
2012, at 77 FR 21580, a notice that announced changes for FY 2013 in 
the MIP for programs authorized under the National Housing Act (the 
Act) (12 U.S.C. 1709(c)(1)), specifically for certain FHA Multifamily 
Housing, Health Care Facilities, and Hospital Mortgage Insurance 
programs for commitments to be issued or reissued in FY 2013. The April 
2012 notice stated that the MIP for market-rate New Construction/
Substantial Rehabilitation loans under Sections 207, 213, 220, 
221(d)(4), 231, 232, and 242 would be increased by 20 basis points, and 
Section 223(a)(7) loans would be increased by 5 basis points; with a 15 
basis point increase for all other market-rate multifamily housing, 
health care facility, and hospital loans. The April 2012 notice 
included a chart that set out for each program for which an MIP 
increase was announced the current basis points and the basis points 
that would apply in 2013. (See April 10, 2012, notice at 77 FR 21581)
    The April 2012 notice clarified that these changes would not apply 
to loans combined with low-income housing tax credits (LIHTCs), other 
affordable housing loans for HUD-assisted properties, or loans insured 
under FHA's Risk Sharing programs. The term ``other affordable housing 
loans for HUD-assisted properties'' includes those properties with an 
active project-based Section 8 contract covering any of its units.
    The April 2012 notice further clarified that positive credit 
subsidy will no longer be required for loans under any of the active 
mortgage insurance programs for multifamily housing or health care 
facilities. Beginning on October 1, 2012, commitments issued for 
Section 223(d) operating loss loans for health care facilities and 
Section 241(a) supplemental loans to FHA-financed multifamily housing 
will be reported under the budget risk category of their respective, 
primary FHA mortgages, which will generate negative credit subsidy in 
FY 2013. In addition, the Department will suspend issuance and 
reissuance commitments under two other programs that had previously 
required positive credit: Section 221(d)(3) multifamily housing loans 
for projects with non-profit sponsors or for Section 223(d) operating 
loss loans to multifamily housing projects with a primary FHA mortgage.
    The April 2012 notice announced that the changes in MIP would be 
effective and apply to any Firm Commitments issued or reissued after 
October 1, 2012.

II. Public Comments

    The public comment period on the April 10, 2012, notice closed on 
May 10, 2012, and HUD received 30 public comments by the close of the 
public comment period. Comments were submitted by mortgage lenders, 
organizations representative of the health care industry and of the 
home building industry, private citizens, and other interested parties. 
All public comments can be found on www.regulations.gov under the 
docket number FR-5634-N-01. All of the public commenters opposed the 
increases in MIPs, and challenged the basis for HUD' support of the 
increases. The following presents the key issues raised by commenters 
and HUD's response to these issues.

Additional Protection for the GI/SRI Fund Is Unwarranted

    Comment: Commenters objected that the GI/SRI fund needs additional 
resources. These commenters offered data from a Government National 
Mortgage Association (GNMA) 2011 annual report that GNMA produced a 
surplus of $1.1 billion that was returned to the U.S. Treasury. 
Commenters suggested that if HUD needs additional resources to bolster 
the GI/SRI fund, then HUD should ``tap'' into the GNMA's surplus.
    Commenters requested that HUD provide data to the industry that 
documents the need to raise the MIP.

[[Page 49008]]

Commenters stated that HUD offered no actuarial analysis to 
substantiate the need to protect the GI/SRI fund. Commenters requested 
that HUD provide the results of studies conducted which resulted in 
HUD's determination that the GI/SRI fund requires ``additional 
protection'' beyond what has already been implemented.
    Commenters stated that that the President's budget for FY 2012 [in 
HUD's section of the budget] assumes continued negative credit subsidy 
for these programs, and they were therefore projected to generate 
income for the U.S. Treasury prior to April 10, 2012, notice. The 
commenters concluded that the proposed increases are unnecessary and 
are a mere attempt to generate additional revenue for the U.S. 
Treasury. The commenters stated that should HUD find it imperative to 
increase the MIPs for FY 2013, proceeds from the revenue generated by 
such increases be used exclusively for the sole benefit of the 
multifamily and healthcare mortgage insurance program.
    Two commenters presented a table comparing 2012 default rates 
against 2013 default rates under specific housing programs (e.g., 
multifamily development, apartment refinances, health care & nursing 
homes, health care refinances, and hospitals). The table presented by 
the commenters reflects that HUD has reduced default rates for the loan 
program; consequently, reducing the amount of funds going into the 
reserves for the GI/SRI fund creating less protection for these 
programs. The commenters requested that HUD to demonstrate how such 
reductions will affect the reserves in the GI/SRI funds.
    A commenter addressed specifically the Section 232 program, stating 
that the growth and successes of the Section 232 loans (without 
increases) are a source of stability for the FHA GI/SRI fund, and given 
this, the commenter finds HUD's announced MIP increases for the Section 
232 program ``baffling''. The commenter refuted HUD claim that the 
``modest'' increases in premiums will have little to no impact on 
program participants. According to the commenter, the real cost to a 
Section 232 loan of $7 million would cost an institution more than 
$10,000 in the first year under the proposed 20 basis points increase. 
Commenter stated that increased MIP will increase the costs of HUD 
financing by 30-40 percent for Section 242 and 232 programs; hence, 
putting the program out of reach for many community hospitals in need 
of affordable financing, and hampering necessary renovations, 
refinancing or new construction projects while threatening access to 
high quality health care services for those in need. Commenter stated 
that rather than increasing MIPs at the expense of seniors or those 
with healthcare needs, HUD consider an alternative approach that would 
increase revenue and incentivize better underwriting and improved 
operations--risk based premium pricing.
    Other commenters focused on HUD's healthcare programs more broadly 
and presented what they identified as ``actual/projected'' credit 
scorings which indicates that HUD's healthcare programs have some of 
the best credit scoring for HUD, that are well within the mandates set 
forth by Federal Credit Reform Act of 1990 (FCRA) (2 U.S.C. 621 et 
seq.).
    HUD Response: HUD is not increasing the premiums to gain additional 
resources to bolster the GI/SRI Fund, and even if it did there is no 
statutory authority to ``tap'' into Ginnie Mae's surplus. Section 307 
of the National Housing Act (12 U.S.C. 1723) provides that all of the 
benefits and burdens of Ginnie Mae operations, after meeting the 
obligations and needed reserves of Ginnie Mae, inure solely to the 
Secretary of the Treasury. The statutory provisions authorizing Ginnie 
Mae do not authorize insuring of mortgages or subsidizing the FHA 
insurance funds.
    The modest increase will ensure that the MIPs are priced 
appropriately to compensate for FHA's risk, consistent with current and 
potentially volatile market conditions. The MIP increase is in line 
with the requirement to responsibly align pricing with risk tolerance 
in administering FHA programs. The modest MIP increase will address 
potential risk attributed to the shift in portfolio from a primarily 
subsidized stock with small loans, to a primarily market rate portfolio 
with larger average loan sizes and the attendant risk of single point 
failures. The modestly increased premiums in addition to already 
record-low interest rates, will not contribute significantly to project 
costs. HUD will continually monitor interest rates, and will price the 
MIP accordingly to adjust to future changes.

Consider Negative Impact on the Debt

    Comment: Commenters claimed that increased MIPs on loans increases 
the cost to service the debt causing a negative impact on the debt; 
hence, providing no additional protection for the GI/SRI fund as 
proposed by HUD.
    HUD Response: This comment assumes the mortgage amount will stay 
the same as it was before the MIP increase. Given current and projected 
interest rates, government-insured financing remains materially less 
expensive than other capital sources and those terms available for FHA-
insured loans prior to the current problems in the credit market. If 
loans are debt service controlled, the higher MIP will result in a 
lower mortgage amount, increasing the equity in the deal, adding to 
protection.

MIP Increases Significant Depart From HUD's Current Policy

    Comment: Commenters stated that, historically, HUD has not raised 
the MIP to generate revenue beyond that needed to cover expected credit 
losses and associated program costs in accordance to the economic model 
as required under FCRA. Commenters stated that the MIP level is 
established based on an economic risk model required under the FCRA, 
and that HUD's announced increases run counter to the FCRA, as it sets 
the MIP at what the Administration considers a rate aligned with the 
private sector. The commenters expressed concern that the April 2012 
notice made no mention of any technical or actuarial defects of the 
economic model; therefore, absent any information to this effect, the 
commenters presumed that HUD believes that the risk model is ``working 
appropriately.''
    HUD Response: Section 505(a) of FCRA authorizes the appropriation 
of sums necessary ``to pay the cost associated with such direct loan 
obligations or loan guarantee commitments.'' There is no reference 
therein to the setting of mortgage insurance premiums. There is also no 
equivalent reference in Section 203(c)(1) of the National Housing Act 
regarding this issue. Section 203(c)(1) authorizes the Secretary ``to 
fix premium charge for the insurance of mortgages under the separate 
sections of this title but in the case of any mortgage such charge 
shall not be less than an amount equivalent to one-fourth of one per 
centum per annum * * *''
    This change is forward-looking. HUD agrees that the risk model is 
working appropriately. The decision to increase MIP is not being made 
due to technical or actuarial defects of the economic model, but rather 
reflects the administration's concern for mitigating potential 
unforeseen risks, concern that HUD financing not be underpriced and 
thus discourage recovery of private capital source, and to 
differentiate between affordable and market rate program requirements.

MIPs Should Not Be Raised To Increase Receipts to Treasury

    Comment: Several commenters opposed increasing MIPs for the

[[Page 49009]]

purpose of generating receipts to the Treasury. The commenters stated 
that the current MIP pricing is appropriately priced for the risks 
assumed. The commenters expressed concern that higher MIPs will not 
serve to build a buffer against future losses considering that there is 
no segregated fund and all excess income is returned to the Treasury 
each year. Commenters stated that should HUD increase MIPs as provided 
in the April 2012 notice, HUD is essentially increasing negative credit 
subsidy anywhere from 36 percent to 244 percent, thereby establishing 
the largest one year increase in negative credit subsidy since FCRA. 
Commenters stated that ``these programs were not created to return 
funds to the Treasury,'' and that returning excess funds from increased 
MIPs to the U.S. Treasury for the overall federal budget for 
unspecified spending sets a ``precedent for poor public policy making 
and has a significant negative impact on national housing policy.''
    HUD Response: Credit subsidy rates vary from year to year, based in 
part on default rates and MIP changes, but also due to changes in 
prepayment rates, rates of recovery on defaults, and improvements to 
cash flow modeling techniques. Changing economic forecasts are a key 
variable in calculating the defaults, prepayments, and recoveries that 
feed into the credit subsidy rate.
    While it is true that the GI/SRI negative credit subsidy is paid 
from the loan financing account to the Treasury General Fund, rather 
than to a dedicated reserve account, the General Fund is also the 
source of funding for any future upward re-estimates of liability for 
GI/SRI programs. FHA has permanent indefinite authority to draw from 
that fund to cover any increases to projected losses. The 
administration also has an obligation to administer the program within 
its statutory and regulatory authority, consistent with prudent risk 
management and risk tolerance.

Avoidance of FHA Under-Pricing Risk and Encouragement of Private 
Lending

    Comment: Several commenters opposed increasing MIPs for the sake of 
encouraging private lending and ensuring that FHA is not under-pricing 
its risk. The commenters expressed that FHA's role is to serve as a 
``counter-cyclical'' capital source and the nation's tepid economic 
situation will surely benefit from it. The commenters conclude that 
Congress did not contemplate setting the FHA MIPs based on the cost of 
capital in the private market.
    Other commenters submitted data that suggests that FHA is not 
crowding out the private sector. The commenters stated that the data 
they provided reflects that the refinance market for multifamily rental 
properties was estimated to be approximately $54 billion in FY 2011. 
Sixty percent was financed by Freddie Mac and Fannie Mae in FY 2011. 
FHA's 223(f) program completed $3.5 billion or 6.5 percent of the 
market in FY 2011. In FY 2011, new construction was 180,000 new starts 
and FHA financed 30,483 units in both new and rehab units. The 
commenters conclude that, ``this represents 16.9 percent of the market. 
This percentage is by no means enough to crowd out the private 
sector.'' The same commenters disagreed that raising the MIP will 
indeed ensure that FHA is not under-pricing its risk. The commenters 
state that the current MIP is set at a level to break-even (e.g., no 
credit subsidy is required) providing only a minimal amount of excess 
income.
    A commenter provided several charts illustrating the 
countercyclical nature of the FHA business; share of the new 
construction market that FHA occupies from FY 2008 through FY 2011; and 
that FHA financing serves as the niche that local banks and thrifts 
have retreated from in recent years. Another commenter presented data 
that illustrated that in 2011 banks and other private funding sources 
provided $2.9 billion in healthcare lending, approximately 300 percent 
more than the amount funded the previous year. The commenter summarized 
its comment with the statement that, based upon its findings, there is 
no reasonable measure that HUD has ``cornered the market.''
    Other commenters stated that as conventional lenders return to the 
market, FHA's market share has declined due to financing sources being 
more flexible and less costly to pursue. The commenters urged HUD to 
provide its estimates of how much additional private capital will 
participate should the MIP increases go into effect. Certain commenters 
referenced data provided by the Mortgage Bankers Association (MBA) that 
they state support their claim that origination of Fannie Mae, Freddie 
Mac, and FHA all reached record volumes in 2011, yet its collective 
share of the market declined in 2011. Loans originated by this group 
accounted for 57 percent of the market in 2011. The commenters stated 
that other private capital sources have returned to the market without 
the incentive of an MIP increase for FHA. The commenters added that the 
data from the MBA reports, suggests that HUD has done a ``stellar job'' 
of assessing risk and underwriting loans; whereby, raising questions 
[within the industry] as to HUD's true rational for this notice. The 
commenters also submitted a report prepared by the Federal Practice 
Group, LLC entitled ``Analysis of Unassisted Multifamily Housing and 
Health Care Loans Insured by the Federal Housing Administration'' dated 
November 2011 to further substantiate their claim that FHA is not 
under-pricing its risk rather HUD is over-pricing its risk.
    HUD Response: This modest MIP increase brings FHA's pricing more in 
line with the private mortgage insurance industry and enables more 
robust private competition while continuing to ensure sufficient levels 
of available capital in these sectors. Given the state of the capital 
markets, government insured financing is underpriced with historically 
low interest rates--this also contributes risk to the insurance fund 
since stressed properties are not as likely to be able to refinance in 
the future. The increase in MIP will address these issues by making it 
more likely private capital will return to the market.
    HUD agrees that FHA's role is to serve as a ``counter-cyclical'' 
capital source. In light of record low interest rates, the proposed 
modest MIP increases are not a barrier to continuing this role. FHA 
insured financing terms, including with the increased MIP, have not 
been this favorable in decades, and are materially less expensive than 
in the years prior to and after the current credit crisis. As stated 
earlier, HUD will continue to monitor interest rates and their impact 
on the market, and will adjust its policies accordingly.
    A market share of 16.9 percent is much higher than it has been 
historically. HUD has not represented that it has ``cornered the 
market,'' but the increased role that FHA has played in the market in 
recent years should be temporary. With this decision FHA is moving 
towards a return to the smaller share of the market it has 
traditionally occupied.
    FHA cannot be compared to Fannie Mae and Freddie Mac. Collectively 
painting the GSEs and FHA with a broad brush does not reflect the fact 
that they have different business models. FHA's market share decreased 
last year, but it is still much higher than it was in 2006 when the 
MIPs were last increased, closer to 3 percent.

Assisted Properties and Tenants Will Be Harmed by MIP Increases

    Comment: Commenters state that any increase in the MIPs be 
supported and preceded by a careful analysis of the

[[Page 49010]]

need and impact of the change, and stated that HUD's notice provided no 
analysis of the need and impact of the proposed increase on borrowers, 
lenders or renters who live in properties insured under the programs. 
The commenters states that these properties will be disadvantaged by 
the imposition of higher MIPs. Commenter stated that the proposed 
increases will adversely harm market rental properties in secondary and 
tertiary markets due in part to private capital (banks, pension funds, 
and insurance companies, etc.,) and large developers' lack of interest. 
The commenters stated that FHA is vital in providing liquidity in the 
secondary and tertiary markets, and urged HUD to differentiate among 
markets when considering increases to the MIPs. A commenter 
specifically expressed concern about properties financed or refinanced 
under the FHA-insured loans in the sections 223(f) and 223(a)(7) 
multifamily programs.
    Another commenter stated that the proposed increases in MIPs will 
be passed through to the tenants residing within the property insured 
by the program(s); thus requiring the rental units to be raised to 
cover theses costs.
    The commenters stated that HUD has not provided compelling 
justification for the increases, and urge HUD not to implement these 
changes at a time when demand for rental housing is increasing and 
preserving and investing in our stock of rental housing is critical.
    HUD Response: Given record-low interest rates, even with an 
increase in MIP higher than proposed, higher mortgage amounts at lower 
debt service burden are available today. Thus, we anticipate no direct 
or indirect negative impact on tenants, borrowers, or lenders. The MIP 
increase is not expected to have a significant impact on rental 
properties in secondary and tertiary markets. FHA will monitor the 
impact of the increased MIP and will adjust its policies accordingly.

Establishing Risk-Based Premiums for Riskier Loans

    Comment: Commenters urged HUD to consider establishing specific 
risk-based premium pricing for lenders that produce riskier loans. 
Commenters stated that these lenders should pay higher premiums, while 
other lenders with little or no defaults should pay lower premiums. The 
commenters assert that this methodology would raise premiums on those 
lenders that pose greater risks to the insurance fund--saving the 
taxpayers from challenges currently experienced by the MMI fund.
    HUD Response: HUD has established risk-based premium pricing with 
this decision on a program-wide basis, but at this time does not 
contemplate differentiating MIP for lenders. For example, the MIP 
increase for 223(a)(7) loans will be lower than the increase for new 
construction loans.

III. MIP Increases for 2013

MIPs for FHA's Mortgage Insurance Programs for FY2013

    In the chart below, this notice announces the MIPs which will be in 
effect during FY 2013 for the multifamily housing, health care 
facilities, and hospital mortgage insurance programs authorized under 
the National Housing Act (12 U.S.C. 1713 et seq.). The multifamily 
housing programs are administered by FHA's Office of Multifamily 
Housing Programs. The health care facilities and the hospital insurance 
programs are administered by FHA's Office of Healthcare Programs. The 
programs of these offices are listed separately on the chart.
    The mortgage insurance premiums to be in effect for FHA firm 
commitments issued or reissued in FY 2013 are shown in the chart below. 
Firm Commitments for applications received prior to June 1, 2012, will 
be subject to the MIP rates applicable in Fiscal Year 2012 (Current 
Basis Points in the following chart) even if issued after October 1, 
2012.

 Fiscal Year 2013 MIP Rates--Multifamily Housing, Health Care Facilities
                     and Hospital Insurance Programs
------------------------------------------------------------------------
                                        Current basis      FY13 basis
                                           points            points
------------------------------------------------------------------------
                             FHA Apartments
------------------------------------------------------------------------
207 Multifamily Housing New                         50                70
 Construction/Sub Rehab without
 LIHTC..............................
207 Multifamily Housing New                         45                45
 Construction/Sub Rehab with LIHTC..
207 Manufactured Home Parks without                 50                70
 LIHTC..............................
207 Manufactured Home Parks with                    45                45
 LIHTC..............................
221(d)(3) New Construction/                         80               N/A
 Substantial Rehabilitation (NC/SR)
 for Nonprofit/Cooperative mortgagor
 without LIHTC......................
221(d)(3) Limited dividend with                     45                45
 LIHTC..............................
221(d)(4) NC/SR without LIHTC.......                45                65
221(d)(4) NC/SR with LIHTC..........                45                45
220 Urban Renewal Housing without                   50                70
 LIHTC..............................
220 Urban Renewal Housing with LIHTC                45                45
213 Cooperative.....................                50                70
207/223(f) Refinance or Purchase for               45*               60*
 Apartments without LIHTC...........
207/223(f) Refinance or Purchase for               45*               45*
 Apartments with LIHTC..............
223(a)(7) Refinance of Apartments                   45                50
 without LIHTC......................
223(a)(7) Refinance of Apartments                   45                45
 with LIHTC.........................
223d Operating Loss Loan for                        80               N/A
 Apartments.........................
231 Elderly Housing without LIHTC...                50                70
231 Elderly Housing with LIHTC......                45                45
241(a) Supplemental Loans for                       80                95
 Apartments/coop without LIHTC......
241(a) Supplemental Loans for                       45                45
 Apartments/coop with LIHTC.........
------------------------------------------------------------------------
          FHA Health Care Facilities (Nursing Homes, ALF & B&C)
------------------------------------------------------------------------
232 NC/SR Health Care Facilities                    57                77
 without LIHTC......................
232 NC/SR--Assisted Living                          45                45
 Facilities with LIHTC..............
232/223(f) Refinance for Health Care              50 *              65 *
 Facilities without LIHTC...........
232/223(f) Refinance for Health Care              45 *              45 *
 Facilities with LIHTC..............
223(a)(7) Refinance of Health Care                  50                55
 Facilities without LIHTC...........

[[Page 49011]]

 
223(a)(7) Refinance of Health Care                  45                45
 Facilities with LIHTC..............
223d Operating Loss Loan for Health                 80                95
 Care Facilities....................
241(a) Supplemental Loans for Health                57                72
 Care Facilities without LIHTC......
241(a) Supplemental Loans for Health                45                45
 Care Facilities with LIHTC.........
                              FHA Hospitals
------------------------------------------------------------------------
242 Hospitals.......................                50                70
223(a)(7) Refinance of Existing FHA-                50                55
 insured Hospital...................
223(f) Refinance or Purchase of                     50                65
 Existing Non-FHA-insured Hospital..
241(a) Supplemental Loans for                       50                65
 Hospitals..........................
------------------------------------------------------------------------
* The first year MIP for the Section 207/223(f) loans for apartments is
  100 basis (one percent) points for the first year, as specified in
  sections 24 CFR 207.252b(a). The first year MIP for a Section 232/
  223(f) health care facility remains at 100 basis points (one percent).
  The first year MIP for a Section 223(a)(7) refinancing loan remains at
  50 basis points.

IV. Positive Credit Subsidy Programs

    Positive credit subsidy will no longer be required for loans under 
any of the active mortgage insurance programs for multifamily housing 
or health care facilities. Beginning on October 1, 2012, commitments 
issued for Section 223(d) operating loss loans for health care 
facilities and Section 241(a) supplemental loans to FHA-financed 
multifamily housing will be reported under the budget risk category of 
their respective, primary FHA mortgages, all of which will generate 
negative credit subsidy in FY 2013. In addition, the Department will 
suspend issuance and reissuance commitments under two other programs 
that had previously required positive credit: Section 221(d)(3) 
multifamily housing loans for projects with non-profit sponsors or for 
Section 223(d) operating loss loans to multifamily housing projects 
with a primary FHA mortgage.

    Dated: August 9, 2012.
Carol Galante,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2012-20045 Filed 8-14-12; 8:45 am]
BILLING CODE 4210-67-P