Increases in some mortgage insurance premiums
October 1, 2007
Against strong opposition from NMHC/ NAA (National Multi Housing Council & National Apartment Association) and other housing groups, on October 18th the Department of Housing and Urban Development (HUD) announced its intention to proceed with a 35.6 percent increase in the mortgage insurance premium for selected multifamily mortgage products. The increase from 45 bps to 61 bps is targeted at mortgages for unsubsidized rental properties, including mortgages to purchase or to refinance existing apartment properties, and for financing for new construction or significant rehabilitation.
HUD claims the increase is necessary due to increased administrative costs for the popular FHA multifamily financing programs. However, HUD did not elaborate or provide evidence or information related to the higher program costs. The 16-basis point increase will affect the Section 221(d)(4) program for new construction and substantial rehabilitation and the 223(f) and 223(a) programs for the acquisition and refinance of apartment properties. Historically and in recent years, these specific FHA multifamily mortgage programs have enjoyed the lowest default rates in the FHA-insured mortgage program. As such, these mortgage programs contribute significantly to FHA revenues, offsetting program costs and contingent liabilities, default and other capital costs elsewhere in the FHA mortgage insurance system.
As part of the housing industry’s unified effort, NMHC/NAA will file comments calling on HUD not to implement the increases on December 1 as proposed. NMHC/NAA are also seeking congressional intervention on the matter, noting objections by members of Congress over HUD’s intent to raise the multifamily mortgage premium. NMHC/ NAA’s letter to HUD objecting to the proposed increase is available at www.nmhc.org/goto/4457.
About the Author: Bob Cain
Some 30 years ago Bob Cain went to a no-money-down seminar and got the notion that owning rental property would be just the best idea there is for making money. He bought some. Trouble was, what he learned at the seminar didn’t tell him how to make money on his rental property. He went looking for help in the form of a magazine or newsletter about the business. He couldn't find any.
Always ready to jump at a great idea, he decided he could put his speaking and writing skills to work and perform a valuable service for other investors who needed more information about property management. So Bob ferreted out the secrets, tricks and techniques of property management wherever he found them; then he passed them along to other landlords.
For over 25 years now, Bob has been publishing information, giving speeches, putting on seminars and workshops, and consulting for landlords on how to buy, rent and manage property more effectively.
