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Notice

Reduction in Certain FHA Multifamily Mortgage Insurance Premiums

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Information about this document as published in the Federal Register.

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AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION:

Notice.

SUMMARY:

This Notice lowers the mortgage insurance premiums (MIPs) for certain Federal Housing Administration (FHA) multifamily mortgage insurance programs whose commitments will be issued in Fiscal Year 2003, and republishes others at the rate that was in effect in Fiscal Year 2002.

DATES:

Comments Due Date: September 30, 2002.

ADDRESSES:

Interested persons are invited to submit comments and responses to the Rules Docket Clerk, Office of the General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street SW., Washington, DC 20410-0500. Communications should refer to the above docket number and title. Facsimile (FAX) responses are not acceptable. A copy of each response will be available for public inspection and copying during regular business hours (7:30 a.m. to 5:30 p.m. eastern time) at the above address.

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FOR FURTHER INFORMATION CONTACT:

Michael McCullough, Director, Office of Multifamily Development, U.S. Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410, (202) 708-1142. Hearing or speech-impaired individuals may access these numbers via TTY by calling the Federal Information Relay Service at (800) 877-8339 (this is a toll-free number).

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SUPPLEMENTARY INFORMATION:

I. Background

The interim rule on “Mortgage Insurance Premiums in Multifamily Programs,” published on July 2, 2001, at 66 Federal Register 35070, revised previous regulations that set mortgage insurance premiums (MIP) at a specific figure. The revision permits the Secretary to change an MIP within the full range of HUD's statutory authority of one fourth of one percent to one percent. This Notice announces, effective October 1, 2002, the mortgage insurance premiums to be in effect for FHA firm commitments issued, amended or reissued in Fiscal Year 2003, which are shown in the table below:

Multifamily loan program
Section 207—Multifamily Housing—New Construction/Substantial Rehabilitation
Section 207—Manufactured Home Parks
Section 220—Housing In Urban Renewal Areas
Section 221(d)(3)—Moderate Income Housing
Section 221(d)(4)—Moderate Income Housing
Section 223(a)(7)—Refinancing of Insured Multifamily Project
Section 223(d)—Operating Loss Loans
Section 207/223(f)—Purchase or Refinance Housing
Section 231—Housing for the Elderly
Section 232—Health Care Facilities
Section 232 pursuant to Section 223(f)—Purchase or Refinance Health Care Facilities
Section 234(d)—Condominium Housing
Section 241(a)—Additions & Improvements for Apartments
Section 241(a)—Additions & Improvements for Health Care Facilities
Section 242—Hospitals
Title XI—Group Practice
HOPE VI Projects with or without LIHTC—[221(d)(4)]
HOPE VI Projects with or without LIHTC—[207, 220 and 231]
Low Income Housing Tax Credit Projects— 221(d)(4), 207, 220, and 231 without HOPE VI

II. Applicable Mortgage Insurance Premium Regulations

The MIP regulations are contained in 24 CFR 207.252, 207.252(a), and 207.254, published at 66 FR 35072 (July 2, 2001). This Notice is published in accordance with the procedures stated in those regulations.

III. Transition Guidelines

A. General

If a firm commitment has been issued at a higher mortgage insurance premium (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 issue an amended commitment on or after October 1, 2002. If the initial endorsement has occurred, the MIP cannot be changed.

B. Extension of Outstanding 80 basis point 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 cash required to close) are still valid.

C. Reprocessing of Outstanding 80 basis point 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 Fiscal Year 2003:

1. Outstanding commitments with initial 60 day expiration dates on or after the effective date of the MIP Notice. FHA Multifamily HUB/Program Center staff will simply reprocess these cases to reflect the impact of the lower MIP and issue amended commitments;

2. Outstanding commitments with initial expiration dates prior to the effective date of the MIP Notice which have pending extension requests or have had extensions granted by FHA beyond the initial 60 day period. These cases will require more extensive reprocessing by FHA staff. Reprocessing will include Start Printed Page 55860an 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 issue amended commitments at the new MIP.

D. Reopening of Expired 80 basis point Firm Commitments

FHA will consider requests from mortgagees, which requests may be either updated Traditional Application Processing (TAP) firm commitment applications or updated Multifamily Accelerated Processing (MAP) applications with updated exhibits, to reopen expired 80 basis point 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 preapplication 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 Fiscal Year 2003, it is anticipated that only three programs will require credit subsidy: Section 221(d)(3) for nonprofit sponsors 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 Fiscal Year 2003.

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Dated: August 26, 2002.

Sean Cassidy,

General Deputy Assistant Secretary for Housing-Federal Housing Commissioner.

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[FR Doc. 02-22158 Filed 8-29-02; 8:45 am]

BILLING CODE 4210-27-P