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FHA to make some (unwelcome) changes in the near future

By JP Marzano

Mortgage and Lending with Movement Mortgage NMLS # 574681

January 30, 2013 05:09 AM

Sometime in 2013, FHA will make more changes in regards to mortgage insurance. Not surprisingly, these changes will not benefit you. In a nutshell, here's what's going to happen:

1) Annual mortgage insurance premiums will rise another 10 basis points, to 1.3%. On a $150,000 loan, that equates to a monthly MI payment of $162.50. Ouch!

2) Mortgage insurance will be mandatory for the entire time you have the loan. Another ouch! Currently, the minimum is 5 years.

For more information, check out this article from HousingWire.com:

http://www.housingwire.com/news/2013/01/30/fha-raises-mortgage-insurance-life-loan

If you're in the market for an FHA loan, you should get moving soon. There has been no date set for these changes but I assume they'll happen sooner rather than later.

If you have any questions, please don't hesitate to contact me.

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Carla Muss-Jacobs, RETIRED

RETIRED / State License is Inactive - Portland, OR

Oh no . . . this can not be a good thing for buyers. Nope, not at all. Thanks for sharing this with us.

Jan 30, 2013 05:43 AM

John Pusa

Glendale, CA

JP - Thanks for the detailed information about FHA to make some (unwelcome) changes in the near future.

Jan 30, 2013 07:10 AM

JP Marzano

Movement Mortgage - Chicago, IL

312-608-1555-Specializing in VA, Condos, and more!

Hi John and Carla,

My pleasure, I'm glad you like the post.

This is not a good thing at all. The only positive changes that FHA has made for borrowers is in regards to streamline refinances, and only for those loans endorsed before 6/1/2009. I'm finding that many clients looking to refi their FHA loans (that were endorsed after that date) find the new refi figures to be unjustifiable.

All of these changes have been made to strengthen FHA's Mutual Mortgage Insurance Fund (MMI), which is where all mortgage insurance premiums (both up-front and annual) go. This fund has been hit hard by a record level of defaults in the last five or so years. But FHA has seemed to have swung the pendulum to far, as their idea of bolstering their reserves (in order to be able to afford insuring more loans) has created a catch-22, as the affordability level of these loans has declined significantly.

Fannie Mae has programs that are similar to FHA's, and are becoming increasingly popular due to the rise in FHA costs.

Have a great week...

Feb 04, 2013 03:38 AM

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JP Marzano

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