U.S. Department of Housing & Urban Development (HUD) Secretary Scott Turner has announced the Federal Housing Administration (FHA) will propose an across-the-board leveling of its Upfront Capitalized and Annual Mortgage Insurance Premiums (MIPs) to 25 basis points for all multifamily program categories. This action is the first step in eliminating the green energy category, which may lower costs for lenders and developers, while enhancing the supply of affordable housing stock for the American people.
“At HUD, we’re mission-minded and focused on helping to put affordable housing within reach for hardworking Americans,” said HUD Secretary Turner. “By leveling MIPs and cutting cost-inflating regulations, we’re unlocking competitive financing and driving down costs across the board to spur development. For too long, access to housing has been tied to obsolete, ideological mandates. Under President Trump’s leadership, Americans are no longer forced to subsidize misguided and inefficient green energy crusades at the expense of real housing solutions.”
The Multifamily Green and Energy Efficient Mortgage (Green MIP) category is costly for lenders and developers and has served as a hinderance to affordable housing development. Under this notice by FHA, the Green MIP category becomes economically obsolete, because MIP rates are uniformly proposed at 25 basis points, and for all loans closed under a Green MIP rate, the requirements to evidence the initial green building achievement and the annual reporting of energy performance would be fully eliminated.
In 2016, HUD instituted a reduced MIP program, Green Housing MIP, to encourage the adoption of more energy efficient and sustainable standards for construction, rehabilitation, repairs, maintenance, and property operations. Owners who had an outstanding loan with a reduced MIP under this program were obligated to various reporting requirements to ensure compliance.
Properties subject to the Green MIP program must achieve and maintain an ENERGY STAR Statement of Energy Performance (SEP) score of 75 or higher as evidenced by a report from ENERGY STAR Portfolio Manager, which produces the SEP and summarizes a calendar year energy consumption for the property.
“While we have a long way to go in addressing Biden’s housing affordability crisis, there are signs America’s Golden Age is underway,” said HUD Secretary Turner in a recent social media post. “Since @POTUS returned to office, HUD’s FHA program has backed 236,000 mortgages—140,000 of which are first-time homebuyers.”
