FHA Announces New “Green Mortgage Insurance Premium” Reductions
FHA Announces New “Green Mortgage Insurance Premium” Reductions
Abstract
"With today's action, we are lowering costs for achieving modern, energy-efficient facilities that will combat climate change while enhancing the safety and well-being of Americans requiring ongoing care."As published in the Federal Register, FHA's new "Section 232 Green MIP" will reduce capitalized upfront MIP by 75 basis points, from an existing 100 basis points to a new 25 basis points, for most Section 232 mortgage insurance categories for mortgages on properties that meet Section 232 Green MIP requirements. FHA will reduce annual MIP rates, which are generally between 45 and 77 basis points, to a new 25 basis points for properties that meet Section 232 Green MIP requirements. On an average FHA Section 232 transaction for an insured loan of $12.5 million, FHA estimates that a borrower will save $93,000 in upfront mortgage insurance premiums on many loan types, and tens of thousands of dollars in annual mortgage insurance premiums depending on the loan type. Section 232 "Green MIP" reductions will apply for new Section 232 mortgage insurance applications where the owner of the facility evidences at application submission to FHA that the property will achieve a specified industry-recognized standard for green building certification and will achieve meaningful, measurable energy and water efficiency improvements. MIP rates will not be modified on FHA-insured Section 232 loans initially or finally endorsed, in conjunction with Interest Rate Reductions, or in conjunction with Loan Modifications. FHA plans to finalize and publish its implementation requirements for lenders to begin using the program with their borrowers in the future, with the intent to begin receiving applications that may be eligible for the Section 232 Green MIP reduction later this year. About FHA's Section 232 Mortgage Insurance for Residential Care Facilities ProgramFHA's Office of Healthcare Programs manages the Section 232 Mortgage Insurance Program for Residential Care Facilities which insures loans to finance the construction, substantial rehabilitation, acquisition, or refinancing of skilled nursing homes, assisted living facilities, and board and care homes.