U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner announced the Federal Housing Administration (FHA) will propose an across-the-board leveling of its Upfront Capitalized and Annual Mortgage Insurance Premiums (MIPs) to 25 basis points for all multifamily program categories.
He said the action is the first step toward eliminating the “ideologically motivated” green energy category, which will lower costs for lenders and developers and will help accelerate the supply of affordable housing stock.
“At HUD, we’re mission-minded and focused on helping to put affordable housing within reach for hardworking Americans,” Turner said. “By leveling MIPs and cutting cost-inflating regulations, we’re unlocking competitive financing and driving down costs across the board to spur development. For too long, access to housing has been tied to obsolete, ideological mandates.”
Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit released a statement in support of the proposal.
“MBA has long advocated for sensible changes that can make HUD’s multifamily lending programs more competitive, with a goal of lowering rental housing costs by boosting supply,” Broeksmit said. “We commend HUD Secretary Scott Turner and his team for being responsive to our recommendations on this issue. Leveling upfront and annual mortgage insurance premiums will help increase rental housing production and improve affordability for renters across the country.”
HUD contended the Multifamily Green and Energy Efficient Mortgage (Green MIP) category is costly for lenders and developers and has proven to be ineffective in furthering affordable housing development. If MIP rates are uniformly proposed at 25 basis points, the requirements to indicate the initial green building achievement and the annual reporting of energy performance would be fully eliminated for all loans closed under a Green MIP rate.
HUD will solicit comments from the public for 30 days.