HUD Cuts MIPs in Half and Lowers Rates for Energy Efficient Properties

On Thursday, January 28th, the Department of Housing and Urban Development (“HUD”) announced it would reduce the multifamily insurance premiums (“MIPs”) in an effort to encourage the renovation of affordable housing units and promote energy-efficient upgrades. Effective April 1, 2016, the Federal Housing Administration (“FHA”) is lowering annual MIPs for “Broadly Affordable” housing to 25 basis points, a reduction of 20 to 25 basis points from current rates. FHA is also lowering its premium on mixed-income multifamily properties by 10 to 35 basis points, to 35 basis points.

Additionally, FHA is lowering annual rates for energy efficient multifamily properties to 25 basis points. This reduction of 20 to 45 basis points applies to properties committed to industry-recognized green building standards as well as to energy performance in the top 25 percent of multifamily buildings nationwide. Qualification for the top 25 percent will be determined using EPA’s Portfolio manager 1-100 score.

According to HUD Secretary Julián Castro, “Families across the country are struggling through an affordable housing crisis. By reducing our rates, this Administration is taking a significant step to encourage the preservation and development of affordable and energy efficient housing in communities large and small. This way, hard-working families won’t have to make the false choice between quality or affordable housing.”

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