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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-

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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

 

January    9, 2017

Mortgagee    Letter   2017-01

To All FHA-Approved Mortgagees
All Direct Endorsement Underwriters
All FHA Roster Appraisers
All FHA Roster Inspectors
All FHA-Approved 203(k) Consultants
All HUD-Approved Housing Counselors
All HUD-Approved Nonprofit Organizations
All Govemmental Entity Participants
All Real Estate Brokers
All Closing Agents

 

Subject Reduction of Federal Housing Administration (FHA) Annual Mortgage Insurance Premium (MIP) Rates

 

Purpose This  Mortgagee   Letter  (ML)  communicates   revised  annual  MIP  rates  for certain  FHA Title  II forward  mortgages.

 

Effective Date This ML is effective for endorsement of mortgages with a Closing/Disbursement date on or after January 27, 2017. Closing/Disbursement date refers to the later of the date of the signing of the Mortgage, or the date of disbursement of the loan proceeds, as is entered in FHA Connection.

 

Affected Programs This guidance applies to all FHA Title II forward mortgage programs except for mortgages insured under National Housing Act section 247 (Hawaiian Homelands. )

 

Affected
Topics
This guidance will affect Appendix 1.0 – Mortgage Insurance Premiums of the FHA Single Family Housing Policy Handbook 4000.1, and will delete the reference to Base Loan Amount in Section ILA.2.e.ii.

 

Background Pursuant to its statutory mandate, FHA continuously strives to achieve the appropriate balance between meeting the housing needs of the borrowers that FHA’s mortgage insurance programs were created to serve, and also the requirement of minimizing the level of risk to the Mutual Mortgage Insurance Fund undertaken relative to the insurance of those mortgages. FHA has determined that the appropriate balance of its statutory operational goals now
requires a reduction of the rate of annual MIP charged pursuant to Section 203(c)(2)(B) of the National Housing Act (NHA). As provided in this ML, the total annual MIP charged pursuant to NHA sections 203(c)(2)(B) and (C) for most Title II Single Family forward mortgages has been revised.

 

Summary of Changes The  following   tables  show  the existing  and the new  annual  MIP  rates.  With this revision  to the annual  MIP rates  for FHA  Title  II forward  mortgages, FHA  is eliminating   the distinction   in rates  based  upon  the base  loan amount.

17-01ml_002

Mortgage Insurance Premiums, Appendix 1.0
The revisions to the mortgage insurance premium rates as shown in Appendix 1.0 attached to this ML will be incorporated into a future publication of the FHA Single Family Housing Policy Handbook 4000.1.

 

Information Collection The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0059 and OMB Control number 2502-0538. In accordance with the Paperwork Reduction Act, HUD may not conduct  or sponsor, and a person is not required  to respond to, a collection of information unless the collection displays a currently valid OMB control number.
Questions Please  address  any questions  about  the topics  addressed   in this Mortgagee Letter  to the FHA  Resource  Center  at (800)  225-5342.    Persons  with hearing or speech  impairments   may reach  this number  via TTY  by calling  the Federal Relay  Service  at (800)  877-8339.    For additional   information   on this Mortgagee   Letter,  please  visit
Information Collection The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0059 and OMB Control number 2502-0538. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

 

Questions Please address any questions about the topics addressed in this Mortgagee Letter to the FHA Resource Center at (800) 225-5342. Persons with hearing or speech impairments may reach this number via TTY by calling the Federal Relay Service at (800) 877-8339. For additional information on this Mortgagee Letter, please visit www.hud.gov/answers.

 

Signature Edward L. Golding signature

Edward L. Golding.
Principal Deputy Assistant Secretary for Housing

Appendix 1.0 – Mortgage Insurance Premiums

Upfront Mortgage Insurance Premium (UFMIP)
All Mortgages: 175 Basis Points (bps) (1.75%) of the Base Loan Amount.
Exceptions:
  • Streamline Refinance and Simple Refinance Mortgages used to refinance a previous
  • FHA-endorsed Mortgage on or before May 31,2009
  • Hawaiian Home Lands (Section 247)
  • Indian Lands (Section 248)
Indian Lands (Section 248) do not require a UFMlP.
Annual Mortgage Insurance Premium (MIP)
Applies to all Mortgages except:
  • Streamline Refmance and Simple Refinance Mortgages used to refinance a previous FHA endorsed Mortgage on or before May 31, 2009
  • Hawaiian Home Lands (Section 247)
Hawaiian Home Lands (Section 247) do not require Annual MIP.
Mortgage Term of More Than 15 Years
Base Loan Amount LTV MIP (bps) Duration
All amounts < 90.00% 55 11 Years
  > 90.00% but
< 95.00%
55 Mortgage term
> 95.00% 60 Mortgage term
Mortgage Term of Less than or Equal to 15 Years
Base Loan Amount LTV MIP (bps) Duration
  < 90.00% 25 11 Years
> 90.00% 50 Mortgage term

Streamline Refinance, Simple Refinance:

For refinance of previous Mortgage endorsed on or before May 31, 2009
UFMIP: 1 (bps) (.01%) All Mortgages
Mortgage Term of More than 15 Years
Base Loan Amount LTV MIP (bps) Duration
  < 90.00% 55 11 Years
> 90.00% 55 Mortgage term

 

Mortgage Term of Less than or Equal to 15 Years
Base Loan Amount LTV MIP (bps) Duration
  < 90.00% 25 11 Years
> 90.00% 25 Mortgage term
For Mortgages where FHA does not require an appraisal, the value from the previous Mortgage is used to calculate the LTV.

Hawaiian Home Lands Section 247

Hawaiian Home Lands Upfront MIP (UFMIP)
  Loan Term in Years
< 18 >18 and <22 >22 and <25 >25
MIP Financed 2.400% 3.000% 3.600% 3.800%
MIP not Financed 2.344% 2.913% 3.475% 3.661%
Annual MIP is not assessed on Section 247 Mortgages.

 

 

 

 

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