FHA Annual Report Attracts Congressional Attention

An article appearing on nationalmortgageprofessional.com indicates that seventeen prominent Senators led by Senator Barbara Boxer (D-CA) have sent a letter to HUD Secretary Julian Castro, urging him to price FHA loans appropriately to cover expected losses and to serve the agency's mission.  The letter was prompted by the Annual Report recently released by FHA that indicates that the Mutual Mortgage Insurance Fund had a balance of $4.8 billion at the end of fiscal year 2014.  That is an increase of $21 billion over the last two years.

The Senate delegation heaped praise on FHA for the progress it has made.  The delegation noted that at the current rate of growth the congressionally mandated 2% excess reserves will be attained by 2016.

The delegation also noted that FHA has increased its premiums by 145% since 2010, and the number of FHA loans has dropped and is now 30% below the number of loans insured in 2000.  Relying on an NAR report the delegation indicated that 375,000 potential home buyers were priced out of the housing market in 2013.

FHA MIP is now at the rate of 1.75% for the upfront fee, 1.35% annually for loans with an LTV of greater than 95%, and at 1.30% annually for loans that are less than 95% LTV.  On FHA insured loans, MIP cannot be discontinued when the LTV falls below 78%, it must be maintained for the life of the loan contrary to conventional loans. 

It is certainly time that the rates be rolled back to a more reasonable level.  You need to express your support for this position to your congressional representatives.  You can locate contact information for your congressional delegates by clicking HERE.