The Federal Housing Administration (FHA) has made good on its threat to raise the mortgage insurance premiums (MIPs) of several multifamily programs.
In April, the FHA first signalled its intent to push the new premiums through. The current MIP rate tacks an additional 45 basis points (bps) to each FHA new construction, rehab or refinancing loan, on top of the interest rate. But for 2013, market-rate new construction/sub rehab deals using the Sec. 221(d)(4) program will pay 65 bps, and market-rate refis using the Sec. 207/223(f) programs will pay a MIP of 60 bps.
When the notice initially came out in April, a coalition of some of the housing industry's largest associations, including the Mortgage Bankers Association and National Multi Housing Council, banded together to voice their opposition. In a strongly worded letter, the coalition claimed that the FHA offered a flimsy excuse for the change, saying that it would boost reciepts to the Treasury and encourage the returns of private lending.
The coalition instead charged that the FHA's multifamily division was cynically being used as a cash cow, to pay into the overall federal budget for unspecified spending.