[Federal Register Volume 87, Number 97 (Thursday, May 19, 2022)]
[Notices]
[Pages 30510-30513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10539]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6302-N-01]


Changes in Certain Office of Healthcare Programs Insurance 
Premiums

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: The Office of Healthcare Programs (OHP) announces proposed 
mortgage insurance premium (MIP) changes to the October 2, 2015, 
notice, for certain commitments issued or reissued beginning October 1, 
2022. Under this Notice, MIP rates for mortgage insurance under the 
Federal Housing Administration's (FHA) Multifamily Housing Insurance 
programs will not change (see the

[[Page 30511]]

January 28, 2016, Federal Register). The proposed MIP change under the 
Office of Healthcare Programs will promote the President's climate 
change initiatives. Lastly, this Notice will include the MIP rates for 
OHP's Office of Residential Care's (ORCF) Section 232, Fire Safety 
Equipment Loan program.

DATES: Comments are due on or before: June 21, 2022.

ADDRESSES: Interested persons are invited to submit comments regarding 
this Notice. All submissions must refer to the above docket number and 
title. There are two methods for submitting public comments:
    1. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the author maximum time to prepare and submit a comment, ensures 
timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
https://www.regulations.gov website can be viewed by other submitters 
and interested members of the public. Commenters should follow 
instructions provided on that site to submit comments electronically.
    2. Submission of Comments by Mail. Members of the public may submit 
comments by mail to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW, Room 10276, Washington, DC 20410-0500. Due to security measures at 
all federal agencies, however, submission of comments by standard mail 
often results in delayed delivery. To ensure timely receipt of 
comments, HUD recommends that comments submitted by standard mail be 
submitted at least two weeks in advance of the deadline. HUD will make 
all comments received by mail available to the public at https://www.regulations.gov.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
notice.

    No Facsimile Comments. Facsimile (FAX) comments will not be 
accepted.
    Public Inspection of Public Comments. All properly submitted 
comments and communications regarding this Notice submitted to HUD are 
available for public inspection and copying between 8 a.m. and 5 p.m. 
weekdays at the above address. Due to security measures at the HUD 
Headquarters Building, an advance appointment to review the public 
comments must be scheduled by calling the Regulations Division at 202-
708-3055 (this is not a toll-free number). Copies of all comments 
submitted are available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: John Hartung, Director, Policy, Risk 
Analysis & Lender Relations Division, Office of Residential Care 
Facilities, Office of Healthcare Programs, Office of Housing, 
Department of Housing and Urban Development, 1222 Spruce Street, St. 
Louis, MO 63103-2836; telephone: 314-418-5238 (this is not a toll-free 
number).

SUPPLEMENTARY INFORMATION:

I. Background

    Section 203(c)(1) of the National Housing Act authorizes the 
Secretary to set the premium charge for insurance of mortgages under 
the various programs in Title II of the National Housing Act. The range 
within which the Secretary may set such charges must be between one-
fourth of one percent per annum and one percent per annum of the amount 
of the principal obligation of the mortgage outstanding at any time. 
(See 12 U.S.C. 1709(c)(1 )).
    On October 2, 2015, HUD published a Notice in the Federal Register 
(80 FR 59809) announcing the MIP rates for FHA Multifamily, Health Care 
Facilities, and Hospital mortgage insurance programs that had 
commitments issued or reissued in FY 2016. Subsequently, on January 28, 
2016, HUD Multifamily published a Notice in the Federal Register (81 FR 
4926) announcing MIP rate reductions to promote affordable and green 
energy-efficient housing. HUD is now proposing rate reductions for 
certain Office of Healthcare Programs to achieve green and energy-
efficiency buildings for the Office of Residential Care Facilities 
(ORCF), Section 232 program. A February 2017 article from Science 
Direct that studied energy consumption costs for healthcare facilities 
states that ``Healthcare facilities are considered major energy 
consumers due to their need for reliable electricity and thermal energy 
supplies for heating, ventilation, lighting, air conditioning and the 
use of medical and non-medical equipment.'' In response to the 
President's climate initiative, and global initiatives to combat 
climate change, and in-line with the Department's and Administration's 
goals to reduce energy consumption and utility costs throughout the 
building sector, rate reductions are proposed to promote healthy, 
green, and energy-efficient healthcare facilities.
    HUD's Multifamily Housing Mortgage Insurance regulation at 24 CFR 
207.254 provides as follows:
    Notice of future premium changes will be published in the Federal 
Register. The Department will propose MIP changes for multifamily 
mortgage insurance programs and provide a 30-day public comment period 
for the purpose of accepting comments on whether the proposed changes 
are appropriate.
    This provision also applies to mortgages insured under the Section 
232 Program (See 24 CFR 232.251).
    Pursuant to the 30-day comment procedure, this Notice announces MIP 
changes for FY 2023, for certain programs authorized under the National 
Housing Act (the Act) (12 U.S.C. 1709(c)(1)), and specifically for the 
Section 232 program. These changes will become effective October 1, 
2022.

II. This Notice

    This Notice announces that HUD is changing MIPs for FHA-insured 
loans on properties under specific Office of Healthcare insurance 
programs. In FY 2013, FHA increased MIPs to compensate for increased 
risk to the FHA-insurance fund after the housing market crisis. Over 
the past eight years since the MIP rate was adjusted, HUD has continued 
to improve underwriting standards to further mitigate risk to the FHA 
portfolio, including improved reviews of appraised values, heightened 
examination of quality of care history, and strengthened requirements 
for borrower and parent entity experience/capacity.
    The proposed MIP changes reflect HUD's commitment to supporting the 
long-term viability and efficiency of its insured portfolio, in line 
with the President's climate agenda. They are also prudent in light of 
the financial health of the Section 232 portfolio and the favorable 
impact that the analogous MIP changes to the FHA Multifamily programs 
have had over the past five years.

A. Green and Energy-Efficient Healthcare Facilities

    Annual MIP will change from current rates generally between 45 and 
77 basis points, to 25 basis points for certain Section 232, Office of 
Residential Care Facilities' FHA-insured loan types. This policy 
intends to encourage owners to adopt higher standards for construction, 
rehabilitation, repairs, maintenance, and property operations that are 
more energy efficient and sustainable than

[[Page 30512]]

traditional approaches to such activities. Those measures will result 
in projects with greater energy and water efficiency, reduced operating 
costs, improved indoor air quality and resident comfort, and reduced 
overall impact on the environment. To facilitate this, mortgage 
proceeds will be used to retrofit properties to meet the stringent 
efficiency standards required to access this lower MIP premium.
    To qualify:
    Upon application for FHA mortgage insurance, the owner must 
evidence that the project will achieve, an industry-recognized standard 
for green building certification. For properties that have already 
achieved a green building standard certification and that are 
refinancing with this lower MIP premium, proceeds must be used to 
complete further efficiency upgrades and thereby achieve the next-level 
green certification standards.\1\ Acceptable, independently verified 
standards include the Enterprise Green Communities Criteria, U.S. Green 
Building Council's LEED-Home, LEED-Highrise, LEED-Midrise, LEED-
Lowrise, LEED-NC, LEED-Healthcare Facilities, EarthCraft Multifamily, 
Earth Advantage Multifamily, the National Green Building Standard 
(NGBS), Passive Building Certification or EnerPHit Retrofits 
certification from the Passive House Institute US (PHIUS), 
International Passive House Association, or the Passive House 
Institute, and Living Building Challenge Certification from the 
International Living Future Institute, or other industry-recognized 
green building standards in the sole discretion of HUD's Office of 
Residential Care Facilities.
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    \1\ HUD recognizes that the owners of projects that become 
insured with this newly announced Green MIP rate may, in later 
years, seek refinancing of that loan. Subsequent program guidance 
will address procedures for continuing that Green MIP rate in the 
new loan.
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    Further, the owner must certify that it has achieved, or will 
pursue, achieve, and maintain a score of 75 or better on the 1-100 
ENERGY STAR score, using EPA's Portfolio Manager for the Senior Care 
Community building type. The reasonableness of achieving and 
maintaining the specified, independent green building standard, and the 
score of 75 or better in Portfolio Manager, must be verified by the 
independent conclusion of the qualified assessor preparing the physical 
condition assessment, and supported by the physical condition 
assessment report and recommendations, the American Society of Heating, 
Refrigerating and Air-Conditioning Engineers (ASHRAE) level II energy 
audit (required for existing structures only), and plans for new 
construction, or rehabilitation, repairs, and operations and 
maintenance. The physical condition assessment report submitted with 
the mortgage insurance application must include a certification from 
the architect, engineer, or certified energy auditor that the planned 
scope of work is reasonably sufficient to achieve and maintain the 
specified certification. Additionally, the owner must submit to HUD 
evidence that the specified, independent green building standard has 
been achieved, and provide a copy of the Portfolio Manager report 
showing building performance at or above 75, at the time those 
standards were achieved, and no more than 24 months after completion of 
new construction, substantial rehabilitation or renovations, or 24 
months after break-even occupancy. The owner must submit the Portfolio 
Manager report annually to HUD showing that the property has maintained 
its efficiency performance at or above 75. HUD anticipates issuing 
implementation guidance via Mortgagee Letter or supplemental Notice. 
Additionally, the Borrower's obligations with respect to the reduced 
MIP will be set forth in the Borrower Regulatory Agreement, the non-
compliance with which may result in HUD's pursuit of all available 
rights and remedies.
    To ensure that the benefits of these MIP rates directly benefit the 
residential care properties and residents, lenders submitting 
applications for loans using this MIP rate are limited in the total 
loan fees they may charge on any loan greater than $2 million, to no 
more than 5 percent of the insured loan amount. Loan fees include (a) 
origination and placement fees as permitted by the MAP Guide, plus (b) 
trade profit, trade premium or marketing gain earned on the sale of the 
GNMA security at a value above par, even if the security sale is 
delayed until after endorsement, minus (c) loan fees applied by the 
Mortgagee to its legal expenses incurred in connection with loan 
closing. This 5 percent limitation on loan fees shall further apply to 
a later Interest Rate Reduction, if any, of the loan.

III. MIPs for FHA's Office of Healthcare Programs Mortgage Insurance 
Programs Effective on October 1, 2022

    HUD is changing MIPs for FHA-insured loans for specific properties 
under The Office of Residential Care Facilities, Section 232 Mortgage 
Insurance program. The chart below details the MIP rates for each rate 
category, and each type of FHA mortgage insurance covered under this 
Notice.
    This Notice also includes the upfront and annual MIP rates for the 
Office of Residential Care Facilities Section 232/223(i) Fire Equipment 
Safety Loan program. The MIP rates for that program are encompassed in 
24 CFR 232.805 but were not specifically referenced in the most recent 
Notice addressing Section 232 MIP rates, so those 232/223(i) rates are 
being included here simply for clarity purposes.

                   FHA Office of Health Care Facilities Insurance Premiums by Rate & Category
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                                                                     Green and
                                                                      energy                         Green and
                                                      Current       efficient:                        energy
                                                      upfront         upfront     Current annual    efficient:
                    Category                        capitalized     capitalized      MIP basis      annual MIP
                                                    MIP* basis      MIP*  basis       points       basis points,
                                                      points          points,                      effective 10-
                                                                   effective 10-                       01-22
                                                                       01-22
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Section 232 Healthcare Facilities (SNF, ALF,
 B&C):
    232 NC/SR Healthcare Facilities w/o LIHTC...             100              25              77              25
    232 NC/SR--Assisted Living Facilities with               100              25              45              25
     LIHTC......................................
    232/223(f) Refi for Healthcare Facilities w/             100              25              65              25
     o LIHTC....................................
    232/223(f) Refi for Healthcare Facilities                100              25              45              25
     with LIHTC.................................
    232/223(a)(7) Refi of Healthcare Facilities               50              25              55              25
     w/o LIHTC..................................
    232/223(a)(7) Refi of Healthcare Facilities               50              25              45              25
     with LIHTC.................................
    223(d) Operating Loss Loan for Healthcare                100             n/a              95             n/a
     Facilities.................................

[[Page 30513]]

 
    241(a) Supp. Loan for Healthcare Facilities              100              25              72              25
     w/o LIHTC..................................
    241(a) Supp. Loan for Healthcare Facilities              100              25              45              25
     with LIHTC.................................
    223(i) Fire Safety Equipment Loan...........             100             n/a             100             n/a
Section 242 FHA Hospital Insurance Program:
    242 Hospitals...............................             100             n/a              70             n/a
    223(a)(7) Refinance of Existing FHA-Insured               50             n/a              55             n/a
     Hospital...................................
    223(f) Refinance or Purchase of Existing Non-            100             n/a              65             n/a
     FHA-Insured Hospital.......................
    241(a) Supplemental Loans for Hospitals.....             100             n/a              65             n/a
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* Upfront premiums for the Office of Health Care Programs are capitalized and based on the first year's annual
  MIP for the applicable rate category and remain at 100 basis (one percent) as specified in 24 CFR 232.805,
  except for 223(a)(7) loans where the upfront rate remains at 50 bps as published in the 2015 FR Notice for
  FY16 MIP Rates. Up front and annual premiums for the Green/Energy program are noted above. MIP premiums are
  separate and apart from (and in addition to) the application fees.

    The MIP rates will become effective for FHA firm commitments issued 
or reissued on or after October 1, 2022. MIP rates will not be modified 
for any loans that close or reach initial endorsement prior to October 
1, 2022. MIP rates will not be modified on FHA-insured loans initially 
or finally endorsed, in conjunction with Interest Rate Reductions, or 
in conjunction with Loan Modifications.

IV. Finding of No Significant Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of NEPA (42 U.S.C. 
4332(2)(C)).
    The FONSI is available for public inspection between 8 a.m. and 5 
p.m. weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW, Room 
10276, Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, an advance appointment to review the docket file 
must be scheduled by calling the Regulations Division at 202-708-3055 
(this is not a toll-free number). Hearing or speech-impaired 
individuals may access this number through TTY by calling the Federal 
Relay Service at 800-877-8339 (this is a toll-free number).

Lopa P. Kolluri,
Principal Deputy Assistant Secretary, Office of Housing--Federal 
Housing Administration.
[FR Doc. 2022-10539 Filed 5-18-22; 8:45 am]
BILLING CODE 4210-67-P