SUPPLEMENTARY INFORMATION:

I. Background

Section 203(c)(1) of the National Housing Act (the Act) authorizes the Secretary to set the premium charge for insurance of mortgages under the various programs in title II of the 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 May 19, 2022, HUD published a notice in the Federal Register proposing that FHA-insured loans on properties under specific Office of Healthcare insurance programs would receive a reduced MIP to be known as a “Green and Energy Efficient” MIP if they met specified energy and water usage reduction requirements (87 FR 30510). The 2022 notice encompassed not only new construction and substantial rehabilitation loans but also specified purchase, refinance, and supplemental loans pursuant to Section 232. The 2022 notice stated that the additional category of premium would “promote the President's climate change initiatives.” On August 18, 2022, HUD published Mortgagee Letter 2022-13, finalizing the proposed MIP and providing further guidance.

On January 20, 2025, President Trump signed Executive Order 14154 titled “Unleashing American Energy,” which shifts agency priorities away from policies that promote green and energy efficient goals.

II. This Notice

In response to Executive Order 14154 (Unleashing American Energy), to increase efficiency, and to ensure financial stability of the FHA insurance fund, the reduced MIP rates for FHA-insured loans on properties under the specified Office of Healthcare insurance programs announced in the 2022 notice are hereby eliminated.

HUD does acknowledge that in 2022 the Department articulated various policy reasons for offering borrowers on some Section 232 new transactions the opportunity to obtain a reduced MIP by ( printed page 27331) meeting criteria that included specified energy and water usage reductions. HUD concluded that, overall, the initiative would “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.”

HUD is no longer persuaded by this rationale. While the very substantial MIP reduction may entice some borrowers to choose materials and systems that are slightly more energy/water efficient than they otherwise might choose, the substantial MIP revenue savings to the borrower (and revenue sacrificed by HUD) is often inordinately disproportionate to the borrower's marginal cost in selecting such options. Further, to the extent, if any, that an energy or water efficient selection may enhance indoor air quality and resident comfort, the residential care facility industry's highly competitive market forces would be expected to incentivize such choices.

As this Notice is published, some submitted Section 232 applications requesting the reduced Green MIP rate may be in the queue or in processing. Although, in light of this Notice, the Department would not be required to process those applications using the reduced MIP rate, we intend to do so where the application meets program requirements. Moreover, HUD recognizes that over many months some lenders and prospective borrowers may already have invested resources in Green MIP applications yet to be submitted. To accommodate this circumstance to a reasonable degree while balancing the need to implement this change, we are making this change effective only as to applications received on or after August 25, 2025.

With this elimination of the Green MIP initiative, the rates for all Healthcare programs, remain as published in 2022 and as had earlier been published in by Notice on March 31, 2016. Those rates are set forth below.

III. 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).

90 FR 27330