[Federal Register Volume 90, Number 121 (Thursday, June 26, 2025)]
[Notices]
[Pages 27330-27331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11808]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6521-N-01]
Elimination of Green and Energy Efficient Mortgage Insurance
Premium Rate Category Applicable to Section 232 Mortgages
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
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SUMMARY: On May 19, 2022, HUD proposed MIP reductions to achieve green
and energy-efficiency buildings for FHA-insured loans on properties
under specific Office of Healthcare insurance programs (the 2022
notice). This notice eliminates the Green and Energy Efficient MIP
category for Healthcare Facilities, and all projects will be subject to
the rate that had been previously established through Federal Register
notice for such FHA-insured loans.
DATES: The elimination of the Green and Energy Efficient MIP category
for Healthcare Facilities will be effective for applications received
by HUD on or after August 25, 2025.
FOR FURTHER INFORMATION CONTACT: John Hartung, Director, Policy, Risk
Analysis and Lender Relations Division, Office of Residential Care
Facilities, Office of Healthcare Programs, Office of Housing,
Department of Housing and Urban Development, 1222 Spruce Street, St.
Louis, MO 63103-2836; telephone: 314-418-5238 (this is not a toll-free
number). HUD welcomes and is prepared to receive calls from individuals
who are deaf or hard of hearing, as well as individuals with speech or
communication disabilities. To learn more about how to make an
accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Email inquiries may be
sent to [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Section 203(c)(1) of the National Housing Act (the Act) authorizes
the Secretary to set the premium charge for insurance of mortgages
under the various programs in title II of the Act. The range within
which the Secretary may set such charges must be between one-fourth of
one percent per annum and one percent per annum of the amount of the
principal obligation of the mortgage outstanding at any time. (see 12
U.S.C. 1709(c)(1)).
On May 19, 2022, HUD published a notice in the Federal Register
proposing that FHA-insured loans on properties under specific Office of
Healthcare insurance programs would receive a reduced MIP to be known
as a ``Green and Energy Efficient'' MIP if they met specified energy
and water usage reduction requirements (87 FR 30510). The 2022 notice
encompassed not only new construction and substantial rehabilitation
loans but also specified purchase, refinance, and supplemental loans
pursuant to Section 232. The 2022 notice stated that the additional
category of premium would ``promote the President's climate change
initiatives.'' On August 18, 2022, HUD published Mortgagee Letter 2022-
13, finalizing the proposed MIP and providing further guidance.
On January 20, 2025, President Trump signed Executive Order 14154
titled ``Unleashing American Energy,'' which shifts agency priorities
away from policies that promote green and energy efficient goals.
II. This Notice
In response to Executive Order 14154 (Unleashing American Energy),
to increase efficiency, and to ensure financial stability of the FHA
insurance fund, the reduced MIP rates for FHA-insured loans on
properties under the specified Office of Healthcare insurance programs
announced in the 2022 notice are hereby eliminated.
HUD does acknowledge that in 2022 the Department articulated
various policy reasons for offering borrowers on some Section 232 new
transactions the opportunity to obtain a reduced MIP by
[[Page 27331]]
meeting criteria that included specified energy and water usage
reductions. HUD concluded that, overall, the initiative would ``result
in projects with greater energy and water efficiency, reduced operating
costs, improved indoor air quality and resident comfort, and reduced
overall impact on the environment.''
HUD is no longer persuaded by this rationale. While the very
substantial MIP reduction may entice some borrowers to choose materials
and systems that are slightly more energy/water efficient than they
otherwise might choose, the substantial MIP revenue savings to the
borrower (and revenue sacrificed by HUD) is often inordinately
disproportionate to the borrower's marginal cost in selecting such
options. Further, to the extent, if any, that an energy or water
efficient selection may enhance indoor air quality and resident
comfort, the residential care facility industry's highly competitive
market forces would be expected to incentivize such choices.
As this Notice is published, some submitted Section 232
applications requesting the reduced Green MIP rate may be in the queue
or in processing. Although, in light of this Notice, the Department
would not be required to process those applications using the reduced
MIP rate, we intend to do so where the application meets program
requirements. Moreover, HUD recognizes that over many months some
lenders and prospective borrowers may already have invested resources
in Green MIP applications yet to be submitted. To accommodate this
circumstance to a reasonable degree while balancing the need to
implement this change, we are making this change effective only as to
applications received on or after August 25, 2025.
With this elimination of the Green MIP initiative, the rates for
all Healthcare programs, remain as published in 2022 and as had earlier
been published in by Notice on March 31, 2016. Those rates are set
forth below.
FHA Office of Health Care Facilities Insurance Premiums by Rate & Category
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Current
upfront Proposed upfront Current annual
Category capitalized capitalized MIP* MIP basis Proposed annual MIP
MIP* basis basis points points basis points
points
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Section 232 Healthcare Facilities
(SNF, ALF, B&C):
232 NC/SR Healthcare 77 77................... 77 77
Facilities w/o LIHTC.
232 NC/SR--Assisted Living 45 45................... 45 45
Facilities with LIHTC.
232/223(f) Refi for Healthcare 100 100.................. 65 65
Facilities w/o LIHTC.
232/223(f) Refi for Healthcare 100 100.................. 45 45
Facilities with LIHTC.
232/223(a)(7) Refi of 50 50................... 55 55
Healthcare Facilities w/o
LIHTC.
232/223(a)(7) Refi of 50 50................... 45 45
Healthcare Facilities with
LIHTC.
223(d) Operating Loss Loan for 95 95................... 95 95
Healthcare Facilities.
241(a) Supp. Loan for 72 72................... 72 72
Healthcare Facilities w/o
LIHTC.
241(a) Supp. Loan for 45 45................... 45 45
Healthcare Facilities with
LIHTC.
223(i) Fire Safety Equipment 100 100.................. 100 100
Loan.
Green and Energy Efficient MIP 25 Eliminated........... 25 Eliminated
Initiative (all applicable
232 Programs).
Section 242 FHA Hospital Insurance .............. ..................... .............. .....................
Program:
242 Hospitals................. 70 70................... 70 70
223(a)(7) Refinance of 50 50................... 55 55
Existing FHA-Insured Hospital.
223(f) Refinance or Purchase 100 100.................. 65 65
of Existing Non-FHA-Insured
Hospital.
241(a) Supplemental Loans for 65 65................... 65 65
Hospitals.
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* MIP premiums are separate and apart from (and in addition to) the application fees.
III. Finding of No Significant Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of NEPA (42 U.S.C.
4332(2)(C).
Frank Cassidy,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2025-11808 Filed 6-25-25; 8:45 am]
BILLING CODE 4210-67-P