www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

 
August 13, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
MORTGAGEE LETTER 97-37
 
TO:  ALL APPROVED MORTGAGEES
 
SUBJECT:  Single Family Production - Further Reduction in Up-Front Mortgage
Insurance Premiums (UFMIP) for First-Time Homebuyers Who Receive Housing
Counseling
 
 
     In Mortgagee Letter 96-48  the Department informed lenders
that the up-front mortgage insurance premium (UFMIP) for first-time homebuyers
who receive housing counseling would be reduced
from 2.25 percent to 2.00 percent.
 
     As part of HUD's ongoing effort to promote greater
opportunities for first-time homebuyers, those who participate in
pre-purchase counseling and homebuyer education programs will now
receive a greater benefit.  Because we believe counseling and
education will help the first-time homebuyer become better
homeowners and borrowers, the Department is further reducing the
UFMIP from 2.00 percent to 1.75 percent.  The Department believes
that this overall reduction will stimulate new interest in
counseling or homeownership from potential first-time homebuyers.
This reduction in UFMIP will be in effect for any FHA insured
loan subject to an up-front premium for which the mortgage is
executed on or after September 22, 1997.  We would like lenders,
builders, real estate agents, and counseling and education
providers to market this initiative.  This date was chosen to
provide adequate time for training of program participants.
 
     Purchase money mortgages insured under the following
Sections of the National Housing Act are eligible for the reduced
UFMIP: Section 203(b), Home Mortgage Insurance; 203(h), Mortgage
Insurance for Disaster Victims; 203(i), Home Mortgage Insurance
in Outlying Areas; 203(n), Single Family Cooperative Program;
245(a), GPMs and GEMs (except on condominiums); 251, Adjustable
Rate Mortgages (except on condominiums).  The annual MIP schedule
remains the same and is indicated on Attachment A.
                                                       2
 
     All provisions and procedures regarding first-time
homebuyers and the requirement for counseling as outlined in
Mortgagee Letter 96-48  remain in effect.
 
     If you have any questions, please contact your local HUD
Office.
 
Sincerely,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner
 
Attachment
PDF FILE OF ATTACHMENT A - UP-FRONT AND ANNUAL MIP RATES
FOR MORTGAGES CLOSED ON OR AFTER SEPTEMBER 22, 1997 HERE.