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    The Mortgagee Letter reduces annual mortgage insurance premium (MIP) rates for most FHA Title II forward mortgages endorsed on or after March 20, 2023. It lowers the annual MIP rates, amends the base loan amount threshold used to determine MIP rates to the national conforming loan limit, and will incorporate these policy changes into HUD Handbook 4000.1. The reductions do not apply to mortgages insured under Section 247 or Streamline/Simple Refinance mortgages used to refinance a previous FHA loan before June 1, 2009.

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    FHA Insurance Premium Drop

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    The Mortgagee Letter reduces annual mortgage insurance premium (MIP) rates for most FHA Title II forward mortgages endorsed on or after March 20, 2023. It lowers the annual MIP rates, amends the base loan amount threshold used to determine MIP rates to the national conforming loan limit, and will incorporate these policy changes into HUD Handbook 4000.1. The reductions do not apply to mortgages insured under Section 247 or Streamline/Simple Refinance mortgages used to refinance a previous FHA loan before June 1, 2009.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    10K views4 pages

    FHA Insurance Premium Drop

    Uploaded by

    Austin Denean
    The Mortgagee Letter reduces annual mortgage insurance premium (MIP) rates for most FHA Title II forward mortgages endorsed on or after March 20, 2023. It lowers the annual MIP rates, amends the base loan amount threshold used to determine MIP rates to the national conforming loan limit, and will incorporate these policy changes into HUD Handbook 4000.1. The reductions do not apply to mortgages insured under Section 247 or Streamline/Simple Refinance mortgages used to refinance a previous FHA loan before June 1, 2009.

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    © All Rights Reserved
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    of 4

    Date: February 22, 2023

    Mortgagee Letter 2023-05

    To: All FHA-Approved Mortgagees


    All Direct Endorsement Underwriters
    All Eligible Submission Sources for Condominium Project Approvals
    All FHA Roster Appraisers
    All FHA-Approved 203(k) Consultants
    All HUD-Approved Housing Counselors
    All HUD-Approved Nonprofit Organizations
    All Governmental Entity Participants
    All Real Estate Brokers
    All Closing Agents

    Subject Reduction of Federal Housing Administration (FHA) Annual Mortgage


    Insurance Premium (MIP) Rates

    Purpose This Mortgagee Letter (ML) communicates revised annual MIP rates for
    FHA Title II forward mortgages.

    Effective Date The provisions of this ML are effective for case numbers endorsed on or
    after March 20, 2023.

    All updates will be incorporated into a forthcoming update of the HUD


    Handbook 4000.1, FHA Single Family Housing Policy Handbook
    (Handbook 4000.1).

    Public Feedback HUD welcomes feedback from interested parties for a period of 30 calendar
    days from the date of issuance. To provide feedback on this policy
    document, please send feedback to the FHA Resource Center at
    [email protected] or call 1-800-CALLFHA (1-800-225-5342). HUD will
    consider the feedback in determining the need for future updates.

    Affected The provisions of this ML apply to all Title II forward mortgages except
    Programs mortgages insured under Section 247 (Hawaiian Homelands) of the National
    Housing Act (NHA), which do not require annual MIP, and Streamline

    www.hud.gov espanol.hud.gov
    Mortgagee Letter 2023-05, Continued

    Refinance and Simple Refinance Mortgages used to refinance a previous


    FHA endorsed mortgage on or before May 31, 2009.

    Background FHA plays a critical role in providing access to homeownership for millions
    of Americans, particularly for first-time homebuyers and underserved
    communities. FHA periodically re-evaluates the appropriate level of MIP
    pricing based on the state of the Mutual Mortgage Insurance Fund (MMI
    Fund) and housing and economic conditions. FHA has determined that a
    reduction for certain programs to the annual MIP rate it charges pursuant to
    NHA Section 203(c)(2)(B) is necessary and appropriate to the execution of
    FHA’s mission and role in the mortgage market.

    Summary of This ML:


    Changes • reduces the annual MIP on Title II Single Family forward
    mortgages endorsed on or after March 20, 2023, with the
    exception of those programs noted; and
    • amends the Base Loan amount threshold used to establish MIP rates
    to the national conforming loan limit.

    FHA Single The policy changes will be incorporated into Handbook 4000.1 as follows:
    Family Housing
    Policy Appendix 1.0 – Mortgage Insurance Premiums (03/20/2023)
    Handbook
    4000.1 Upfront Mortgage Insurance Premium (UFMIP)
    All Mortgages: 175 Basis Points (bps) (1.75%) of the Base Loan Amount.
    Exceptions:
    • Streamline Refinance and Simple Refinance Mortgages used to
    refinance a previous FHA-endorsed Mortgage on or before
    May 31, 2009
    • Hawaiian Home Lands (Section 247)
    • Indian Lands (Section 248)
    Indian Lands (Section 248) do not require a UFMIP.

    2
    Mortgagee Letter 2023-05, Continued

    Annual Mortgage Insurance Premium (MIP)


    Applies to all Mortgages except:
    • Streamline Refinance and Simple Refinance Mortgages used to
    refinance a previous FHA endorsed Mortgage on or before
    May 31, 2009
    • Hawaiian Home Lands (Section 247)
    Hawaiian Home Lands (Section 247) do not require Annual MIP.
    Mortgage Term of More Than 15 Years
    Base Loan LTV MIP (bps) Duration
    Amount
    Less than or ≤ 90.00% 50 11 years
    equal to > 90.00% but ≤ 95.00% 50 Mortgage term
    $726,200 > 95.00% 55 Mortgage term
    Greater than ≤ 90.00% 70 11 years
    $726,200 > 90.00% but ≤ 95.00% 70 Mortgage term
    > 95.00% 75 Mortgage term
    Mortgage Term of Less than or Equal to 15 Years
    Base Loan
    LTV MIP (bps) Duration
    Amount
    Less than or ≤ 90.00% 15 11 years
    equal to > 90.00% 40 Mortgage term
    $726,200
    Greater than ≤ 78.00% 15 11 years
    $726,200 > 78.00% but ≤ 90.00% 40 11 years
    > 90.00% 65 Mortgage term

    Streamline Refinance, Simple Refinance:


    For refinance of previous Mortgage endorsed on or before
    May 31, 2009
    UFMIP: 1 (bps) (.01%) All Mortgages
    All Mortgage Terms
    Base Loan LTV Annual Duration
    Amount MIP (bps)
    All ≤ 90.00% 55 11 years
    > 90.00% 55 Mortgage term
    For Mortgages where FHA does not require an appraisal, the value from
    the previous Mortgage is used to calculate the LTV.

    3
    Mortgagee Letter 2023-05, Continued

    Hawaiian Home Lands Section 247


    Hawaiian Home Lands Upfront MIP (UFMIP)
    Loan Term in Years
    ≤18 >18 and ≤22 >22 and ≤25 >25
    MIP Financed 2.400% 3.000% 3.600% 3.800%
    MIP not 2.344% 2.913% 3.475% 3.661%
    Financed
    Annual MIP is not assessed on Section 247 Mortgages.

    Paperwork The information collection requirements contained in this document have


    Reduction Act been approved by the Office of Management and Budget (OMB) under the
    Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520) and
    assigned OMB control numbers 2502-0005; 2502-0059; 2502-0117; 2502-
    0189; 2502-0302; 2502-0306; 2502-0322; 2502-0358; 2502-0404; 2502-
    0414; 2502-0429; 2502-0494; 2502-0496; 2502-0525; 2502-0527; 2502-
    0538; 2502-0540; 2502-0556; 2502-0561; 2502-0566; 2502-0570; 2502-
    0583; 2502-0584; 2502-0589; 2502-0595; 2502-0600; and 2502-0610. In
    accordance with the PRA, HUD may not conduct or sponsor, and a person is
    not required to respond to, a collection of information unless the collection
    displays a currently valid OMB control number.

    Questions Any questions regarding this ML may be directed to the FHA Resource
    Center at 1-800-CALLFHA (1-800-225-5342), [email protected], or
    www.hud.gov/answers. The FHA Resource Center is prepared to accept
    calls from persons who are deaf or hard of hearing, as well as individuals
    with speech or communication disabilities. Information on how to make an
    accessible phone call is available at
    https://www.fcc.gov/consumers/guides/telecommunications-relay-service-
    trs.

    Signature

    Julia R. Gordon
    Assistant Secretary for Housing -
    FHA Commissioner

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