Document Updates: Section 184 Loan Guarantee Fee Changes

The Office of Native American Programs (ONAP) announced June 6, 2023 through Dear Lender Letter 2023-05 a reduction in the Section 184 upfront loan guarantee fee from 1.50 to 1.00 percent and the annual loan guarantee fee from 0.25 to 0.00 percent. These new fee policies are effective on July 1, 2023. Consequently, Docutech is making some changes to the applicable Data Integrity Checks that typically trigger for Section 184 loans.

Retired Data Integrity Checks

These two oldest checks will be retired completely:

• “An annual premium of 0.25% must be collected for Section 184 Indian Housing loans. HUD has not announced the exact method for calculating these premiums, but the current calculation method (using the average outstanding loan balance over the previous year) reflects our understanding of the requirement [see 79 FR 60492 (2014)]. If you need further information, please contact Support at {Phone Number Displayed Here}.”
• “Invalid Mortgage Insurance Premium amount(s), for Section 184 FHA loan.”

Updated Closing Date Before 7/1/2023 Data Integrity Checks

The two existing checks (a Warning and Error version based on system default “FHA UFMIP/Annual MIP Data Integrity Check Options”) will now only fire if the Closing Date is prior to July 1, 2023; or if the Closing Date does not have a value and Today’s Date is prior to July 1, 2023.

• “The FHA UFMIP rate should be 1.50% and the FHA Annual MIP rate should be 0.25% (for LTV over 78.00%) for Section 184 Indian Home Loan Guarantee Program loans closed before 7/1/2023. The UFMIP rate on this loan is currently set to {UFMIP FI 748 Displayed Here}%.  The MIP rate on this loan is currently set to {MIP FI 1104 Displayed Here}%.”

Note that the phrase “loans closed before 7/1/2023” has been added to these existing checks.

New Closing Date On or After 7/1/2023 Data Integrity Checks

Two new checks (a Warning and Error version based on system default “FHA UFMIP/Annual MIP Data Integrity Check Options”) will only fire if the rates do not match the new fee structure and the Closing Date is on or after July 1, 2023; or if the Closing Date does not have a value and Today’s Date is on or after July 1, 2023.

• “The FHA UFMIP rate should be 1.00% and the FHA Annual MIP rate should be 0.00% for Section 184 Indian Home Loan Guarantee Program loans closed on or after 7/1/2023. The UFMIP rate on this loan is currently set to {UFMIP FI 748 Displayed Here}%. The MIP rate on this loan is currently set to {MIP FI 1104 Displayed Here}%.”

Global Field Prompt

Since the annual premium is being removed for Section 184 loans, the global field prompt for field 1104 “Mortgage Insurance Premium, 1st Renewal Percent” is also being modified to only trigger for loans with Closing Dates prior to 7/1/2023, or, if the Closing Date is empty, if Today’s Date is prior to 7/1/2023.

Effective Date

As discussed earlier, these Data Integrity Check and Global Prompt changes will be in effect on June 28, 2023. These changes have been pushed to Stage servers for testing until that time. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.

T3S-9051

The preceding is for informational purposes only and is not and may not be construed as legal advice. No third party entity may rely upon anything contained herein when making legal and/or other determinations regarding its practices, and such third party should consult with an attorney prior to embarking upon any specific course of action.