3.1.10 Mortgage Insurance Premium

A. The mortgage insurance premiums (MIP) are established by the Firm Commitment and may not be changed after initial endorsement. The annual MIP is based on a percentage of the mortgage amount and may vary, depending on the insurance program and the MIP rates as most recently posted in the Federal Register. For New Construction or Substantial Rehabilitation, the initial annual capitalized MIP is collected at Initial Endorsement. The capitalized MIP is the mortgage amount times the annual MIP percentage rate for each year of construction with any portion of a year rounded up to one year. Any MIP due for a partial year of construction is paid at the anniversary of the Initial Endorsement. All MIP payments collected between Initial and Final Endorsement are reconciled at Final Endorsement.

B. For Section 223(f) and Section 223(a)(7) loans, the upfront capitalized MIP is payable at Initial Endorsement. This upfront capitalized MIP is the same for all market rate acquisition or refinancing transactions and equals 1% for Section 223(f) loans and ½% (50 basis points) for Section 223(a)(7) loans.

C. The standard upfront and annual MIPs are reduced for any project qualifying as Affordable, Broadly Affordable, or Green and Energy Efficient Housing, as defined in the Federal Register published on March 31, 2016 (24 CFR Part 266) as follows:

1. 25 basis points for Broadly Affordable

2. 35 basis points for Affordable

3. 25 basis points for Green and Energy Efficient Housing

D. These categories are more fully described in Appendix 3. The Federal Register Notice is available in the link below: https://www.regulations.gov/document?D=HUD-2016-0007-0001