FHA MORTGAGE INSURANCE PREMIUM INCREASE COMING IN APRIL

I can remember going years without FHA MI changes. FHA continues to struggle with defaults. Although the loans originated in the last two years have lower default levels, FHA still is not in a good place financially due to foreclosures. They announced the following change today.  There was a period of time when the low monthly mortgage insurance made a lot of sense for a borrower to go FHA. It will not be so based on this change.

FHA Mortgage Increase Premium Announcement

FHA has just announced they are raising insurance premiums as follows (effective April 1st):

(We assume it will apply to case numbers assigned on or after April 1st.)

 

The increases are:

  • 10 basis point increase in Annual Premium for single family forward mortgages (to 1.25% Annual Premium)
  • 25 basis point additional increase for loans above $625,500  ( to 1.5% annual premium)
  • Increase the Upfront Premium on new originations by 75 basis points to 1.75%
  • (No changes to reverse mortgages)

As you can see there are rather significant changes.

Streamline refinance change

Expect a reduction in the streamline refinance premium to be announced in the next week or so.  It would apply to FHA loans made prior to May 2009.  We expect there will be significant reductions in both the upfront and the annual premium for these loans. You can see where trying to refinance FHA loans that are performing and currently have mortgage insurance of .55% is a problem when the rate would go to 1.25%.

Implementation Schedule


The April 1st proposed deadline, if it is not changed, will be problematic for the reprogramming of systems.  Hopefully, FHA will provide flexibility if and when lenders voice concerns about the unfeasibility of such a short deadline.

 
This post has been included in Kentucky Real Estate News
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1 Comments on FHA MORTGAGE INSURANCE PREMIUM INCREASE COMING IN APRIL

FEB
27
2012
546,251 Points 2 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Good Evening Dura

Thanks for the post and information. Have a great day
4:48pm • #1


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