For commitments issued or reissued beginning April 1, 2016, many transactions will now qualify for lower MIP rates. Additionally, HUD Deputy Director Dan Sullivan advised that if a loan is in processing (i.e. the loan did not and will not close before April 1), lenders may submit amended Firm Commitment Applications reflecting the new MIP if the lender anticipates closing the loan on or after April 1 and the property and financing terms meet relevant requirements.
- Broadly Affordable transactions will be reduced to 25 bps: Includes projects with 90% or greater of the units covered by either a Section 8 Project Based contract or affordability use restriction under the Low Income Housing Tax Credit Program.
- Affordable* transactions will be reduced to 35 bps: Includes projects with between 10% to 90% of all units covered by either a Section 8 Project Based contract or affordability use restriction under the Low Income Housing Tax Credit Program.
*HUD’s definition of Affordable has been broadened to include properties with inclusionary zoning, density bonus set-asides and other local affordability restrictions meeting the required tests. Please see your Love Funding originator for more detail.
- Green/Energy Efficient Housing will be 25 bps. Qualified projects must:
- Achieve (or will achieve and maintain) an industry recognized standard for green building. Examples of acceptable standards include Enterprise Green Communities Criteria, U.S. Green Building Council’s LEED-H, LEED-H Midrise, LEED-NC or ENERGY STAR Certification, to name a few.
- Achieve (or will achieve) a score of 75 or better on the 1-100 Energy Star Score using EPA’s Portfolio Manager.
- No change to Market Rate Housing, except those that meet the criteria for green and energy efficient housing.
Note that additional restrictions apply to many of these changes, such as the requirement for a minimum of 15 years remaining on the qualifying affordable use restriction and a requirement that owners agree to accept Section 8 vouchers on affordable transactions.