Sec. 204. Premiums
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The FHA shall establish and collect premium payments for mortgage insurance provided pursuant to this title and the amendments made by this title, and shall provide for sharing of premiums with entities entering into risk transfer agreements with the FHA pursuant to section 203 based on the relative portion of the mortgage insured and the risk of loss borne. In the case of mortgages on 1- to 4-family residential properties insured by the FHA, the premiums established and collected by the FHA shall include an annual premium payment payable during the entire term of the mortgage, in the following amounts:
In the case of a mortgage for which the outstanding principal obligation is equal to or exceeds 80 percent of the appraised value of the property, the annual premium payment shall be an amount that is not less than 0.55 percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to any premium collected at the time of insurance and without taking into account delinquent payments or prepayments), as the FHA shall establish. In the case of a mortgage for which the outstanding principal obligation is less than 80 percent of the appraised value of the property, the annual premium payment shall be an amount that is less than the amount of the annual premium payment established pursuant to paragraph (1), as the FHA shall establish.
The FHA shall establish guidelines and procedures for mortgagors to apply for reductions of premiums pursuant to subsection (b)(2) and to submit evidence regarding the appraised value of the property subject to the mortgage. Notwithstanding section 203(c) of the National Housing Act ( 12 U.S.C. 1709(c) ) or any other provision of law, premium rates established under this section shall be established in amounts sufficient to cover— costs of providing mortgage insurance coverage under this title; costs for administration, operations, management, and technology systems for the FHA for carrying out this title; the capital ratio required for the Mutual Mortgage Insurance Fund under section 216(b) and under section 219 with respect to mortgage insurance for mortgages on multifamily properties; and salaries and expenses for officers and personnel of the FHA.
The FHA may, with respect to mortgages on 1- to 4-family residential properties insured by the FHA, establish a mortgage insurance premium structure involving a single premium payment collected prior to the insurance of the mortgage or annual payments (which may be collected on a periodic basis), or both. Upon any termination of the insurance obligation of the Mutual Mortgage Insurance Fund by payment of any mortgage insured thereunder, which termination occurs after the expiration of the 24-month period beginning on the date of the enactment of this Act, the FHA shall distribute to the mortgagor a share of the Participating Reserve Account of the Mutual Mortgage Insurance Fund in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound actuarial and accounting practice.
In no event shall any distributable share pursuant to paragraph
(1)exceed the aggregate scheduled annual premiums of the mortgagor to the year of termination of the insurance. The Secretary shall not distribute any share to an eligible mortgagor under this subsection beginning on the date which is 6 years after the date the Secretary first transmitted written notification of eligibility to the last known address of the mortgagor, unless the mortgagor has applied in accordance with procedures prescribed by the Secretary for payment of the share within the 6-year period. This subsection shall apply with respect only to mortgages insured under the Mutual Mortgage Insurance Fund after the date of the enactment of this Act. Nothing in this section may be construed to affect premiums charged for mortgage insurance provided for mortgages insured before the date of the enactment of this Act. Nothing in this section shall permit or be construed to permit the FHA to apply different premium rates to the same mortgage product during the same time period based solely on the characteristics of the mortgagor.
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U.S. Code