HUD Rescinds Notice of Increase in Mortgage Insurance Premium

By Anuradha Kher, Online News EditorWashington D.C. — The US Department of Housing and Urban Development (HUD) has decided to rescind a notice published in October last year that would have increased the mortgage insurance premium (MIP) on a number of multifamily programs. The current mortgage rate is 45 basis points while the proposal was to increase it to 61 basis points, a 35.6 percent increase.“HUD did not reveal the exact reason for its decision to rescind the notice, but the bottom line was that there was a lot of pressure from the Congress as well as the industry,” David Cardwell, vice president of capital markets at National Multi Housing Council, tells MHN. “This proposal has been talked about for two 2 years and its been rescinded at the last minute before. It’s unclear what the government will do next year,” he says.After the administration proposed the fee increase in its FY 2008 budget, 117 members of the House and 38 Senators signed letters addressed to HUD opposing the premium increase. HUD listened to those concerns as well as to 229 letters submitted by the industry stating that FHA is a vital financing mechanism.The Mortgage Bankers Association (MBA) provided evidence that the programs affected by the increased fee were financing affordable housing. The MBA survey, which looked at programs affected by the proposed MIP increase, found that 98 percent of the properties had average rents affordable to families earning 80 percent or less of area medium income.“We are grateful for the opportunity to work closely with Congress, HUD and the administration on this important issue,” says Kieran Quinn, CMB, chairman of the MBA.