www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

June 27, 1994
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 94-29
     TO:  ALL APPROVED MORTGAGEES
     SUBJECT:  ALERT OF PROPOSED INCREASE IN MORTGAGE INSURANCE
                 PREMIUM FOR MULTIFAMILY PROJECTS
 
          The purpose of this Mortgagee Letter is to alert you of the
     proposed increase in the mortgage insurance premium (MIP) rate
     from .5 percent to 1 percent of the mortgage amount for
     multifamily projects.  When promulgated, the MIP increase will be
     applicable to multifamily projects insured under Sections 207,
     220, 221(d)(3), 221(d)(4), 223(d), 223(f), 231, 241, 242,
     Title XI and the sale with insurance of mortgage notes assigned
     to HUD.
 
          The proposed MIP increase was included in HUD's Fiscal Year
     1995 Budget, which must still be approved by Congress.  It is
     anticipated that the effect of the MIP increase will improve cash
     flow into the General Insurance and Special Risk Insurance Funds,
     lower overall losses and lower subsidy rates on the effected
     programs.
 
          If approved by Congress, the MIP increase must be
     implemented through regulatory changes.  The MIP increase will be
     effective on projects that have not been issued a conditional or
     firm commitment before the effective date of the revised
     regulations.
 
          All future SAMA or Feasibility Letters will alert mortgagors
     of the proposed MIP increase.  The Letter will inform the
     mortgagor that if a commitment has not been issued for their
     project prior to the effective date of the increased MIP charge,
     project mortgage applications will be processed with a 1 percent
     MIP rate.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing
- Federal Housing Commissioner