Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
This proposed notice would make changes to the loan-to-value (LTV) financing available to qualified borrowers of FHA-insured loans. This notice proposes to set a 95 percent maximum LTV for FHA-insured loans over $625,500, with certain exemptions. FHA's annual Fiscal Year 2012 report to Congress on the financial status of the FHA Mutual Mortgage Insurance Fund (MMIF, or Fund), reported a decline from Fiscal Year 2011 in the Fund's statutorily mandated capital reserve ratio and cited FHA's decision to continue taking steps to improve the MMIF's short- and long-term outlook. HUD has determined that this proposed change to the LTV requirements is necessary to improve the health of the MMIF, while ensuring continued access to mortgage credit for American families.
Interested persons are invited to submit comments regarding this notice to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410–0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title.
1.
2.
To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.
Karin Hill, Director, Office of Single Family Program Development, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 9278, Washington, DC, 20410; telephone number 202–708–4308 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Relay Service at 800–877–8339.
During times of economic volatility, the FHA has maintained its countercyclical influence, supporting the private sector when access to housing finance capital is otherwise constrained. FHA played this role in the recent housing crisis, and the volume of FHA insurance increased rapidly during the housing crisis as private sources of mortgage finance retreated from the market. However, the growth of the MMIF portfolio over the period of time during the housing crisis has contributed significantly to the projected losses to, and a corresponding decrease in the financial soundness of, the Fund. Consistent with the Secretary's responsibility under the National Housing Act (12 U.S.C. 1701
FHA's annual Fiscal Year 2012 report to Congress on the financial status of the MMIF reported a decline in the Fund's statutory capital reserve ratio and cited FHA's plans to continue taking action to improve the Fund's financial soundness.
Although the steps taken since 2009 have had a positive effect on the financial soundness of the Fund, the projected levels of default, foreclosure, and claims within the existing MMIF portfolio and a number of predicted economic factors have resulted in a lower statutory capital reserve ratio for the MMIF for Fiscal Year 2012 compared to Fiscal Year 2011. In order to further protect the financial soundness of the MMIF, FHA must be vigilant in monitoring the performance of the portfolio, and adjust its standards to effectively manage financial risk. As a result, FHA has been continually evaluating its portfolio to identify and respond to risks in ways that benefit the Fund and, ultimately, consumers and taxpayers. During its evaluation, FHA has determined that the MMIF is subject to greater risk when FHA insures loan amounts in excess of $625,500. In response to this risk, the maximum LTV
Certain FHA-insured loans will be exempted from this notice. Loans made pursuant to the FHA Streamline Refinance without an appraisal program, which has no LTV calculation, and the 203(k) Rehabilitation Mortgage Insurance Program, which utilizes two different LTV calculations in addition to the cost of improvements, are exempted. The Secretary may, as he deems necessary, exempt from this notice loans from other programs by publishing a
FHA welcomes comments on the proposals set forth in this notice, including whether there may be additional FHA programs that should be exempted from this notice, for a period of 30 calendar days. FHA also welcomes comments on the economic effects in the proposals set forth in this notice. All comments will be considered in the development of the
This notice involves discretionary establishment and review of loan limits which do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this notice is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).