FHA Mortgage Insurance Premium (MIP) Cancellation Changes On 6/03/13

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

One more of the FHA proposed changes in November of last year  will be a reality in less than two weeks.  The change that I am referring to is the FHA Mortgage Insurance Premium (MIP) Cancellation Changes On 6/03/13.   I blogged about this change in February of this year, but feel that a reminder is in order now that it is upon us.  Also the chart below is a little easier to understand than the previous one that I posted.

On June 3, 2013 FHA will make the following changes to the Cancellation of the FHA Mortgage Insurance Premium (MIP), for FHA Case Numbers endorsed on or after June 3rd.  However, FHA Streamline Refinances on FHA Mortgages that the FHA Case Number was endorsed on or before May 31, 2009 are exempt from this change. 

On June 3, 2013 FHA will eliminate the cancellation of the MIP on FHA Mortgage with Terms greater than 15 years, and increase the number of years before the MIP can be eliminated on FHA Mortgages with Terms less than or equal to 15 years.  This change will have a long term impact, but in the short term will not be felt until the new FHA Mortgage goes beyond 5 years, since presently the FHA MIP cannot cancel until 5 years and the Principle Loan Balance has been reduce to 78% Loan-To-Value (LTV) .  The chart below give a clear explanation of the FHA Mortgage Insurance Premium (MIP) Cancellation Changes On 6/03/13, based on the Term of the Mortgage, and the Loan-To-Value (LTV)

 

 

As state in the previous blog on this change, I think that FHA's decision to implement these change is a huge mistake, and a further step backwards for both the Real Estate Market, and the Lending Industry.  In a time that we are hoping to motivate Buyers to purchase homes, the FHA Mortgage Insurance Premium (MIP) Cancellation Changes On 6/03/13 will act to demotivate Buyers, and a barrier to the recovery.  First Time and Lower Income Buyers will mostly feel the impact of these changes the most, which is ironic because the present administration claims to be an advocate of lower and medium income households.  Strange way to show support.

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Kate McQueen, REALTOR® 05/22/2013 12:47 AM
Topic:
Lending / Financial
Location:
Connecticut
Groups:
Realtors®
Mortgages
What is New in Loan Products
1st Time Buyers
Real Estate Rookie
Tags:
fha mip cancellation change

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Rainmaker
158,464
Sheila Morales
Kauai Property Shop - Kapaa, HI
Your Kauai Hawaii Agent

It's going to get ugly out there in mortgage land.

May 21, 2013 06:35 PM #1
Rainmaker
2,063,173
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

I have a similar post coming out on this topic. This new policy is a real ripe off to the folks that really don't have any other mortgage financing.

May 21, 2013 07:03 PM #2
Rainmaker
317,424
Bill and MaryAnn Wagner
Wagner Real Estate Group - Galloway Township, NJ
Jersey Shore and South Jersey Real Estate
Thanks for the update George!
May 21, 2013 09:13 PM #3
Rainmaker
3,561,281
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. I will bookmark this and share it with others.

May 21, 2013 09:14 PM #4
Rainmaker
671,285
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Good Morning:  This is some great Info for all in the business,  keep up the good work and good luck with your business,  E

May 21, 2013 10:27 PM #5
Rainmaker
625,255
Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

George, I agree with you!  I think this change is a mistake and in the end will hurt the buyers this program is designed to help.

May 21, 2013 10:34 PM #6
Rainmaker
1,246,227
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

George, I agree I can't see where this will help first time and low income buyers.

May 21, 2013 10:48 PM #7
Rainer
229,722
Jeffrey Smith
Author of 'Realtors Guide To Short Sale Success - Eustis, FL
Short Sale Education

The problem with democrats is they mean well and think they are doing the right thing but they continue to hurt the ones they think they are helping. If only political leaders had to live in the real world...

How fsst would things change if politicians were forced to accept minimum wage? ...The only change would be more bribes. The stupendous salaries, retirement, benefits and perks of our politicians keep them isolated from the people they are supposed to serve. It's also why they exempt themselves from laws they enact on others.

May 21, 2013 10:56 PM #8
Rainmaker
264,186
Pat & Steve Pribisko
Keller Williams Greater Cleveland West - Westlake, OH

George: This is an excellent blog for those that have not heard about this change to the MIP on FHA loans.  In my market, more lenders have conventional mortgages as low as 5% down.  Of course buyers with 5% down will have MIP, but not fro the life of the loan.  How things change; and, not for the benefit of those who need to pursue FHA loan.

Thanks for another blog on this topic.  It is important to keep this info "front and center."

May 21, 2013 11:01 PM #9
Ambassador
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Debbie Reynolds
Berkshire Hathaway HomeServices PenFed Realty, Your Clarksville Real Estate Professional - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

George, One of our local lenders stood up at a Board function and said "Try to get your clients to consider conventional financing instead of FHA. FHA has priced themselves out of the market."

May 21, 2013 11:34 PM #10
Rainmaker
271,348
Kate McQueen, REALTOR®
Realty ONE Group-Lone Star - Cypress, TX
Tailored service for your real estate needs!

I agree that this is a bad idea.  I'm hoping to see alternatives to the FHA loan coming from conventional sources.  Will re-blog this.  Thanks for the reminder.

May 22, 2013 12:44 AM #11
Rainmaker
808,054
Elite Home Sales Team
Elite Home Sales Team OC - San Clemente, CA
A Tenacious and Skilled Real Estate Team

Who is operating this government and comes up with these regulations?  Unintended consequences are always there.

May 22, 2013 12:59 AM #12
Rainer
296,484
Dwight Puntigan
Dwight Puntigan - Saint Peters, MO
Dwight Puntigan

This does narrow the pool of buyers.  Many of the first time buyers will not be in a position within five years to refinance, if ever.  Conventional loans with 20% down is the best way to go, except, my customer base can not afford to do that.

May 22, 2013 03:12 AM #13
Rainmaker
1,184,904
Wayne and Jean Marie Zuhl
Hallmark Realtors - Clark, NJ
The Last Names You'll Ever Need in Real Estate
George, Thank you for posting. This is really great info!
May 22, 2013 04:18 AM #14
Rainmaker
255,603
Susan Jackson
America's Network Realty Group, Inc - Sandy Springs, GA

George, I think you are right. I think it will hurt buyers who need this type of loan.

May 22, 2013 05:44 AM #15
Rainmaker
963,879
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota Real Estate Expert

I think most people just make payments and when considering the numbers it really should not make them not buy a home...however, they do need to be better informed of other options out there.

May 22, 2013 05:49 AM #16
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Sheila, you are right this is not a good change, and will make conventional loans much more attractive.

Joe, yep but the present administration is for the little guy, after all they told us that they are.  It sure would be nice if their actions matched their words.

Bill Wagner you are welcomed

Gita glad you found it useful

Ed and Tracy thank you.

Kathy you are absolutely right.

Michael it wont, in fact it will do the opposite.

Jeffrey, yep make them live under the conditions that they think are so great for everyone else except themselves.

Pat and Steve, not only will the PMI on the Conventional Programs have the provision to be eliminated but the PMI payment will be much lower than the MIP payment while it is on the loan.

Debbie that Lender was absolutely right and saying what he said.

 

 

May 22, 2013 09:54 AM #17
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Kate they have already started to be put together.  Our local Housing Finance Authority is about to role one out and I will blog about it once all the guidelines and details are in place.

Mark we know who is running the show, but voters just keep on putting them back into office election after election.

Dwight, few borrowers are able to do that these days, and first time homebuyers rarely have that kind of money for a down payment.  It would be nice if they did.

Wayne and Jean thank you.  Hope it comes in handy for you.

Susan we are starting to see hat happen already

Chuck you are right.  Our job is to provide the information for borrowers to make and intelligent decision.  It is the borrowers job to then take the information and make the decision.

May 22, 2013 10:02 AM #18
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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, politicians don't want to be bothered or confused with the facts

May 22, 2013 11:04 AM #19
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Fred Griffin
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Will FHA become the "Payday Loan" of the Mortgage Industry?  This is not good.

May 23, 2013 12:42 PM #20
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