Federal Housing Administration Enacts Green Mortgage Insurance Premium Reduction

HUD No. 22-152
HUD Public Affairs
(202) 708-0685
TRANSLATED
Thursday
August 18, 2022

FEDERAL HOUSING ADMINISTRATION PURSUES TO REDUCE GREEN MORTGAGE INSURANCE PREMIUM

The guidance issued today explains how borrowers participating in the FHA’s Section 232 Mortgage Insurance for Residential Care Facility program can obtain reduced insurance premiums on eligible “green” mortgages.

Federal Housing Commissioner: Green MIP rates “will support the climate goals of the Biden-Harris Administration and HUD’s Climate Action Plan”

WASHINGTON – The Federal Housing Administration (FHA) announced today that it has issued guidance to lenders to reduce the annual mortgage insurance premium (MIP) for most Section 232 Residential Care Facility properties that meet green requirements. construction guarantees and which will achieve energy efficiency and measurement and water quality improvement. It was announced in his May 19, 2022and August 12, 2022, Federal Register information, the “Green MIP” reduction reduces the premium MIP rates and the annual MIP rates to 25 basis points. The new rates will go into effect for mortgages on eligible FHA home insurance companies issued or reissued on or after October 1, 2022.

“We want to ensure that the need to address climate change is aligned with the need to ensure access to community care,” he said. said Federal Housing Commissioner Julia Gordon. “The Green MIP bills will provide funding to increase the facility’s energy and water efficiency, which will not only support the climate goals of the Biden-Harris Administration and HUD’s Climate Action Plan, but also reduce the cost of operating the facility.”

This reduction is designed to encourage owners of nursing homes, assisted living facilities, nursing homes, assisted living facilities, and intermediate care facilities to adhere to standards for construction, renovation, repair, maintenance, repair, and housing services that are more efficient and sustainable than it’s always there. materials.

About the Section 232 “Green MIP” Reduction
For residential properties that meet the “Green MIP” requirements contained in today’s Mortgagee Letter, the installation:

  • Reduces annual MIP rates from the existing 45-100 points to 25 points for Section 2 32 New Construction/Substanial Rehabilitation, 223(f) Purchase or Refinance, 223(a)(7) Refinance, and 241(a) Repairs , Additions, and Software Development.
  • They reduce the annual MIP rates, which are usually between 45 and 77 basis points, to 25 basis points.
  • It costs the borrower an estimated $93,000 in mortgage insurance premiums on the average FHA Section 232/223(f) insured loan of $12.5 million, and thousands of dollars in home insurance premiums.
  • It involves a new and extensive renewal of Section 232 mortgage insurance in which the property owner demonstrates in the FHA application that the property has met the industry’s recognized standard for green building certification and has met the requirements, energy efficiency and water efficiency. .
  • It allows for a reduction in MIP rates for the financing of properties that have already obtained a recognized green building certificate as long as the funds are used to complete improvements and meet green certification standards, if applicable.

About FHA’s Section 232 Mortgage Insurance for Residential Care Facilities Program

The FHA’s Office of Healthcare Programs administers the Section 232 Mortgage Insurance Program for Residential Care Facilities which provides loans for the construction, major renovation, acquisition or renovation of skilled nursing homes, assisted living facilities, and nursing homes. As of June 2022, FHA had active insurance on more than 3,700 nursing home loans nationwide with a total outstanding balance of $32.2 billion.