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Bill H.R. 5981 passes - FHA Mortgages to increase it's annual mortgage insurance premium

 

FHA first proposed the monthly mortgage insurance changes in the beginning of 2010. Bill H.R. 5981 was first passed by the House in the spring and was just passed by the Senate the other day.  What does this bill do for FHA mortgages? They have projected that it will yield approximately $300 million per month to the FHA insurance fund.
So what are the new FHA changes? - For terms greater than 15 years -
LTV's <= 95% will increase the monthly fee by 85 bps
LTV's >   95% will increase the monthly fee by 90 bps
And lastly, it will reduce the Upfront Mortgage Insurance Premium, UFMIP, from 225 basis points to 100 basis points.
The plan is to go into effect by September 7th, 2010 on all FHA case numbers. FHA gives it's reasons to this new plan. FHA letter from David H. Stevens
 
 
 
So what do the actual changes mean to the average borrower that will rely on FHA loans when purchasing a new home or refinancing?
                - The Old Plan -
LTV's <= 95% will increase the monthly fee by 50 bps
LTV's >   95% will increase the monthly ... more

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