Written By: Stacey Sprain, OpEd Writer
HUD formally announced upcoming changes to the FHA mortgage insurance structure in an email that went out to single family email subscribers on February 27th. A Mortgagee Letter is expected in the near future which will communicate final full details of the upcoming changes to the FHA mortgage insurance structure.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
Based on the announcement, it appears lenders will be presented with some real challenges with implementing the new premium structure changes, all of which will be based on the FHA case assignment date and base loan amount.
Below, I have laid out the changes in a format I think will be helpful to keep at hand in the coming months as we all adjust to the new premiums. Note that this information is based on preliminary information and is subject to change with the issue of the official Mortgagee Letter which may include additional details.
UP-FRONT MIP
• If the FHA case is assigned 10/04/2010 – 03/31/2012: UFMIP = 1.00% per Mortgagee Letter 2010-28
• If the FHA case is assigned on and after 04/01/2012: UFMIP = 1.75% per pending Mortgagee Letter
ANNUAL MI
If the FHA case is assigned 04/18/2011 – 03/31/2012 per Mortgagee Letter 2011-10:
• > 15 yr Term: > 95% LTV = 1.15%
<=95% LTV = 1.10%
• < = 15 yr Term: > 90% LTV = .50%
>=79% LTV = .25%
If the FHA case is assigned on or after 04/01/2012 per pending Mortgagee Letter:
• > 15 yr Term: > 95% LTV = 1.25%
<=95% LTV = 1.20%
• < = 15 yr Term: > 90% LTV = .60%
>=79% LTV = .35%
If the FHA case is assigned on or after 06/01/2012 and the base loan amount exceeds $625,500 per pending Mortgagee Letter:
• > 15 yr Term: > 95% LTV = 1.50%
<=95% LTV = 1.45%
• < = 15 yr Term: > 90% LTV = .85%
>=79% LTV = .60%
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
FHA determined that these increases are necessary to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund. Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.
FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.
About The Author
Stacey Sprain - As an op-ed writer, Ms. Stacey Sprain is currently a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution.
