90 FR 121 pgs. 27330-27331 - Elimination of Green and Energy Efficient Mortgage Insurance Premium Rate Category Applicable to Section 232 Mortgages
Type: NOTICEVolume: 90Number: 121Pages: 27330 - 27331
Pages: 27330, 27331Docket number: [Docket No. FR-6521-N-01]
FR document: [FR Doc. 2025-11808 Filed 6-25-25; 8:45 am]
Agency: Housing and Urban Development Department
Official PDF Version: PDF Version
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6521-N-01]
Elimination of Green and Energy Efficient Mortgage Insurance Premium Rate Category Applicable to Section 232 Mortgages
AGENCY:
Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.
ACTION:
Notice.
SUMMARY:
On May 19, 2022, HUD proposed MIP reductions to achieve green and energy-efficiency buildings for FHA-insured loans on properties under specific Office of Healthcare insurance programs (the 2022 notice). This notice eliminates the Green and Energy Efficient MIP category for Healthcare Facilities, and all projects will be subject to the rate that had been previously established through Federal Register notice for such FHA-insured loans.
DATES:
The elimination of the Green and Energy Efficient MIP category for Healthcare Facilities will be effective for applications received by HUD on or after August 25, 2025.
FOR FURTHER INFORMATION CONTACT:
John Hartung, Director, Policy, Risk Analysis and Lender Relations Division, Office of Residential Care Facilities, Office of Healthcare Programs, Office of Housing, Department of Housing and Urban Development, 1222 Spruce Street, St. Louis, MO 63103-2836; telephone: 314-418-5238 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Email inquiries may be sent to disaster_recovery@hud.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 203(c)(1) of the National Housing Act (the Act) authorizes the Secretary to set the premium charge for insurance of mortgages under the various programs in title II of the Act. The range within which the Secretary may set such charges must be between one-fourth of one percent per annum and one percent per annum of the amount of the principal obligation of the mortgage outstanding at any time. (see 12 U.S.C. 1709(c)(1)).
On May 19, 2022, HUD published a notice in the Federal Register proposing that FHA-insured loans on properties under specific Office of Healthcare insurance programs would receive a reduced MIP to be known as a "Green and Energy Efficient" MIP if they met specified energy and water usage reduction requirements (87 FR 30510). The 2022 notice encompassed not only new construction and substantial rehabilitation loans but also specified purchase, refinance, and supplemental loans pursuant to Section 232. The 2022 notice stated that the additional category of premium would "promote the President's climate change initiatives." On August 18, 2022, HUD published Mortgagee Letter 2022-13, finalizing the proposed MIP and providing further guidance.
On January 20, 2025, President Trump signed Executive Order 14154 titled "Unleashing American Energy," which shifts agency priorities away from policies that promote green and energy efficient goals.
II. This Notice
In response to Executive Order 14154 (Unleashing American Energy), to increase efficiency, and to ensure financial stability of the FHA insurance fund, the reduced MIP rates for FHA-insured loans on properties under the specified Office of Healthcare insurance programs announced in the 2022 notice are hereby eliminated.
[top] HUD does acknowledge that in 2022 the Department articulated various policy reasons for offering borrowers on some Section 232 new transactions the opportunity to obtain a reduced MIP by
HUD is no longer persuaded by this rationale. While the very substantial MIP reduction may entice some borrowers to choose materials and systems that are slightly more energy/water efficient than they otherwise might choose, the substantial MIP revenue savings to the borrower (and revenue sacrificed by HUD) is often inordinately disproportionate to the borrower's marginal cost in selecting such options. Further, to the extent, if any, that an energy or water efficient selection may enhance indoor air quality and resident comfort, the residential care facility industry's highly competitive market forces would be expected to incentivize such choices.
As this Notice is published, some submitted Section 232 applications requesting the reduced Green MIP rate may be in the queue or in processing. Although, in light of this Notice, the Department would not be required to process those applications using the reduced MIP rate, we intend to do so where the application meets program requirements. Moreover, HUD recognizes that over many months some lenders and prospective borrowers may already have invested resources in Green MIP applications yet to be submitted. To accommodate this circumstance to a reasonable degree while balancing the need to implement this change, we are making this change effective only as to applications received on or after August 25, 2025.
With this elimination of the Green MIP initiative, the rates for all Healthcare programs, remain as published in 2022 and as had earlier been published in by Notice on March 31, 2016. Those rates are set forth below.
| Category | Current upfront capitalized MIP* basis points | Proposed upfront capitalized MIP* basis points | Current annual MIP basis points | Proposed annual MIP basis points |
|---|---|---|---|---|
| Section 232 Healthcare Facilities (SNF, ALF, B&C): | ||||
| 232 NC/SR Healthcare Facilities w/o LIHTC | 77 | 77 | 77 | 77 |
| 232 NC/SR-Assisted Living Facilities with LIHTC | 45 | 45 | 45 | 45 |
| 232/223(f) Refi for Healthcare Facilities w/o LIHTC | 100 | 100 | 65 | 65 |
| 232/223(f) Refi for Healthcare Facilities with LIHTC | 100 | 100 | 45 | 45 |
| 232/223(a)(7) Refi of Healthcare Facilities w/o LIHTC | 50 | 50 | 55 | 55 |
| 232/223(a)(7) Refi of Healthcare Facilities with LIHTC | 50 | 50 | 45 | 45 |
| 223(d) Operating Loss Loan for Healthcare Facilities | 95 | 95 | 95 | 95 |
| 241(a) Supp. Loan for Healthcare Facilities w/o LIHTC | 72 | 72 | 72 | 72 |
| 241(a) Supp. Loan for Healthcare Facilities with LIHTC | 45 | 45 | 45 | 45 |
| 223(i) Fire Safety Equipment Loan | 100 | 100 | 100 | 100 |
| Green and Energy Efficient MIP Initiative (all applicable 232 Programs) | 25 | Eliminated | 25 | Eliminated |
| Section 242 FHA Hospital Insurance Program: | ||||
| 242 Hospitals | 70 | 70 | 70 | 70 |
| 223(a)(7) Refinance of Existing FHA-Insured Hospital | 50 | 50 | 55 | 55 |
| 223(f) Refinance or Purchase of Existing Non-FHA-Insured Hospital | 100 | 100 | 65 | 65 |
| 241(a) Supplemental Loans for Hospitals | 65 | 65 | 65 | 65 |
| * MIP premiums are separate and apart from (and in addition to) the application fees. | ||||
III. Finding of No Significant Impact
A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of NEPA (42 U.S.C. 4332(2)(C).
Frank Cassidy,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2025-11808 Filed 6-25-25; 8:45 am]
BILLING CODE 4210-67-P