On January 28, HUD Secretary Julián Castro announced that the Federal Housing Administration (FHA) will cut multifamily mortgage insurance rates to spur the financing of affordable housing and energy-efficient apartments. According to the announcement, the move will result in the rehabilitation of an additional 12,000 units of affordable housing each year. FHA’s multifamily programs account for 9.2 percent of the total multifamily mortgage market.
HUD anticipates that lowering multifamily insurance rates will leverage over $400 million in new mortgage financing for affordable housing and energy-efficient development. Lowering insurance rates for energy-efficient projects is expected to encourage owners to adopt higher standards for construction and rehabilitation. The rate reductions take effect on April 1, 2016.
Upfront insurance rates will be set at 25 basis points for Broadly Affordable and Energy-Efficient properties and 35 basis points for Mixed-Income properties. FHA is also reducing upfront premiums to support the goals of the announcement. Importantly, the upfront premiums will remain unchanged for market rate properties that are not energy-efficient.
NMHC/NAA remain strongly committed to helping ensure affordable housing nationwide. We will provide comments to HUD on the proposed changes, which are open for public comment until February 17, 2016. We also look forwarding to continuing to work closely with HUD, the Obama Administration and Congress on key solutions for addressing this critical issue.
To read the NMHC/NAA media statement in response to the announcement, please click here.