Last week, HUD announced that it is lowering multifamily mortgage insurance premiums (MIPs) to .25% across all programs. HUD has published a notice in the Federal Register and there is now a 30-day public comment period.
Current MIPs for market-rate projects are .65% for new construction loans and .60% for acquisition and refinancing loans. The new MIP in effect provides a cost of capital reduction ranging from .40% to .35%.
To paraphrase a memorable line from a 1970s Western comedy – Interest rate cut from the Federal Reserve? We don’t need no stinkin’ rate cut, we got lower MIPs! (Editor’s Note – literary license notwithstanding, an interest rate cut would certainly make things even better.)
We will not see any MIP reductions in the healthcare mortgage insurance programs. However, HUD recently announced a new Express Lane option for Section 232/223(f) skilled nursing, assisted living and memory care loans. Deals that qualify will move to the front of the application queue and receive expedited reviews. What are the qualifications? Lower LTV and higher DSC than the standard underwriting; minimum CMS star rating, no defaults on prior HUD-insured debt and a clean operating history. Want more details? Contact us. We are about to file an application that qualifies for the Express Lane – stay tuned to this space for updates!
One final note: HUD is on the move! HUD Secretary Scott Turner announced last week that they will be moving its headquarters from Washington, DC to Alexandria, VA. The old building, with its “Brutalist” architectural style reminiscent of Soviet-era housing, is underutilized and has significant repair needs.
