President Obama’s 2013 Federal Budget, released in February, included plans to raise the mortgage insurance premiums (MIP) on many of the Department of Housing and Urban Development’s (HUD) loan programs, including those for healthcare facility lending, and the increased rates will soon be going into effect, the department recently reminded program users in an email.
The reminder noted that existing firm commitment applications—both “Initial Submittal of Firm” or “Direct to Firm” applications—that were in the queue prior to June 1 of this year will be grandfathered under the previous MIP rates.
HUD’s email listed the following information:
- MIP Collected by Lenders—All Projects
ORCF does not regulate the amount of mortgage insurance premiums collected by lenders from borrowers in refinance or construction transactions. Lenders may have their own policies as they deem appropriate.
- MIP Collected by ORCF at Initial Closing—223(f) and 223(a)(7) Transactions
The current practice remains in place. The first year MIP for a Section 232/223(f) health care facility remains at 100 basis points (one percent). The first year MIP for a Section 223(a)(7) refinancing loan remains at 50 basis points.
- MIP Collected by ORCF at Initial Closing—New Construction, Rehabilitation, 241a, Blended Rate Transactions
Effective October 1, 2012 the lender must provide a check for one year of MIP at initial closing.
- MIP Underwritten Amount—New Construction, Rehabilitation, 241a, Blended Rate Transactions
For underwriting purposes, the MIP should be calculated on a per diem basis as required for cost certification.
- MIP Year 2 Source of Funds—New Construction, Rehabilitation, 241a, Blended Rate Transactions
Lenders may request release of funds from the Working Capital account to make this payment if the project has not yet reached final endorsement. This request should be made in writing to the ORCF Closing Coordinator.
- MIP Cost Certification Amount—New Construction, Rehabilitation, 241a, Blended Rate Transactions
For cost certification purposes the MIP should be calculated on a per diem basis. This was included in instructions in the email blast of January 6, 2012 in the Lender Narrative Cost Certification Supplement attachment.
Click here to view the new rate information.
Written by Alyssa Gerace