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In a two-pronged approach to address issues related to affordable housing and energy efficiency, the Federal Housing Administration (FHA) is reducing the multifamily insurance rate as a solution to bring more capital financing into the creation of rental developments.
The rate reductions will take effect April 1 and lowering annual rates on “broadly affordable housing”–where least 90 percent of the units are under Section 8 contract and/or covered by Low Income Housing Tax Credit–to 25 basis points (bps) and lowering rates on affordable mixed-income properties to 35 bps. For energy-efficient properties, the FHA is lowering annual rates to 25 bps. Multifamily insurance rates for market-rate properties that are not energy efficient will remain unchanged.
"NAMB is happy to see a reduction in insurance costs on FHA multifamily," said Rocke Andrews, CMC, CRMS, president of NAMB—The Association of Mortgage Professionals. "Hopefully, this will encourage new building and reduce the cost of housing to many Americans in the rental property market."
“Families across the country are struggling through an affordable housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Julian Castro. “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.”
"HUD's decision today is a positive step toward helping support the need for affordable and more cost efficient rental housing," said David H. Stevens, CMB, president and CEO of the Mortgage Bankers Association (MBA). "Specifically, the reduction in Mortgage Insurance Premiums for FHA loans on multifamily affordable and energy efficient properties may help build more apartments and allow for more families and individuals to access affordable and energy efficient housing. This is one significant element to expand the availability of affordable and workforce rental housing in America and we will continue to advocate for other measures toward these critically important objectives."