Mar
16

FHA is increasing the Mortgage Insurance premium on April 1, 2013

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FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent. FHA will increase premiums on jumbo mortgages ($625,500 or larger) by 5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium. These premium increases exclude certain streamline refinance transactions.

Term > 15 Years
Base Loan Amt. LTV Previous MIP New MIP
< $625,500 < 95.00% 120 bps 130 bps < $625,500 > 95.00% 125 bps 135 bps
> $625,500 < 95.00% 145 bps 150 bps > $625,500 > 95.00% 150 bps 155 bps

Term < 15 Years Base Loan Amt. LTV Previous MIP New MIP < $625,500 78.01% - 90.00% 35 bps 45 bps < $625,500 > 90.00% 60 bps 70 bps
> $625,500 78.01% – 90.00% 60 bps 70 bps
> $625,500 > 90.00% 85 bps 95 bps

The changes outlined below are effective for all mortgages with FHA case numbers assigned on or after June 3, 2013:

FHA will also require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan. Commencing in 2001, FHA cancelled required MIP on loans when the outstanding principal balance reached 78 percent of the original principal balance. However, FHA remains responsible for insuring 100 percent of the outstanding loan balance throughout the entire life of the loan, a term which often extends far beyond the cessation of these MIP payments. FHA’s Office of Risk Management and Regulatory Affairs estimates that the MMI Fund has foregone billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012 because of this automatic cancellation policy. Therefore, FHA will once again collect premiums based upon the unpaid principal balance for the entire period for which FHA is entitled. This will permit FHA to retain significant revenue that is currently being forfeited prematurely.

This second table shows the previous and the new effective annual MIP rates for loans with an LTV of less than or equal to 78 percent and with terms of up to 15 years.

Term < 15 Years Base Loan Amt. LTV Previous MIP New MIP Any Amount <78.00% 0 bps 45 bps Borrowers are currently able to access FHA-insured financing no sooner than three years after they have experienced a foreclosure, but only if they have re-established good credit and qualify for an FHA loan in accordance with FHA’s fully documented underwriting requirements. It has come to FHA’s attention that a few lenders are inappropriately advertising and soliciting borrowers with the false pretense that they can somehow “automatically” qualify for an FHA-insured mortgage three years after their foreclosure. This is simply not true and such misleading advertising will not be tolerated.

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Categories : FHA Lending

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