Mortgage and Lending with Salem and Bend Oregon FHA, VA & USDA 503.931.4490

Good Friday! There are some (big) changes to the FHA program beginning on September 7th, 2010. 

FHA is lowering their Up Front Mortgage Insurance (Financed on top of the loan) from 2.25% down to 1%. Yes, this sounds great doesn't it? Not so much, they are raising the monthly mortgage insurance from .55% to .90%. It may not sound like much, so let's take a look at the example below:


How does this affect our clients? 

$200,000 Purchase price

4.5% Interest Rate 

PRE- September 7th

Principal interest and mortgage insurance payment: $1,127.16


AFTER- September 7th

Principal interest and mortgage insurance payment: $1,172.45


As you can see the payments will rise by $45.29 in this example.


If you have a borrower looking for a home now (or on the fence waiting), it's important

to let them know about these changes. This can alter their "approved for" amount by as much as $10,000!


It's important to work with someone who understands how these changes will affect you and your clients.

Please let me know if I can help in any way.

Have a wonderful Weekend! 



Below you will find the actual letter sent out from David Stevens.



August 5, 2010 LINKS

Over the past week, Congress has taken quick action and passed H.R. 5981.

The bill gives FHA the authority to adjust its annual mortgage insurance

premium, yielding approximately $300 million per month in value to the FHA

Mutual Mortgage Insurance Fund at a time when its reserves are perilously


As I have previously stated in my testimony before Congress, FHA will lower its

upfront premium simultaneously with the increase to the annual premium¹. It

is our intention that effective on September 7 insurance premium will be

adjusted down to 100 basis points on all amortization terms and the annual

mortgage insurance premium will increase to 85--‐90 basis points on amortization

terms greater than 15 years². A Mortgagee Letter will be forthcoming once

President Obama signs the bill into Law schedule, I wanted to immediately

inform the industry of our plans so the lending community can begin preparing

for the operational and system structure on all new case numbers by September 7, 2010.


With this authority, FHA is in a better position to address the increased

demands of the marketplace and return the MMI fund to congressionally

mandated levels without disruption to the housing market. While we appreciate

and applaud this recent action, there is still work to be done. HUD remains steadfast

in its commitment to comprehensive FHA reform legislation, similar to the FHA

Reform Act passed earlier this year by the and risk management efforts.

We hope Congress will take swift action to pass management efforts will not be

complete without the ability to monitor lender performance and ensure compliance

with our rules.

Although the transition timeframe is short, implementation by September is

critical. Thank you in advance for the efforts of you and your organization to

make this change happen on such short notice. We appreciate your hard work

and continued partnership.


¹The upfront and annual premium changes do not apply to the following FHA Programs: Title I,

HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian

Reservations), Section 223 (e) (declining neighborhoods), Section 238(c) (Military Impact areas in

Georgia and New York).

Comments (5)

Rob Magnotta
Huntington Beach, Newport Beach, Seal Beach, Irvine REALTOR - Huntington Beach, CA
Huntington Beach & Newport Beach Coastal Specialist

Great information, Travis. This is exactly why buyers need to find a mortgage broker who is involved full time in the real estate industry. I see a lot of brokers working in real estate part time, and they're just not up on the most current changes.

Aug 06, 2010 04:33 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Travis... good job here... I didn't see much difference than mine, except I had a pretty chart.  But I am glad that you did this, because it gives another view with a different purchase price.  thanks

jeff belonger

Aug 06, 2010 05:13 AM
Diane Casale
Coldwell Banker First, Huntsville, AL - Huntsville, AL
REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama

Thanks so much for this info. Hope you don't mind me re-blogging!! THANK YOU, THANK YOU!!

Aug 07, 2010 03:10 AM
Nicole Donaghy
Re/Max Purpose Driven - Lexington, SC
Helping Families Home in Lexington and Columbia

Thanks for the post!  Such important info.  I hope you don't mind me re-blogging, too!

Aug 09, 2010 05:00 AM
Mike Young, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Travis, do you know anyone on the lender side doing 223(e) loans at this time?

Jul 22, 2012 08:44 AM