Changes to FHA Mortgage Insurance Announced

Changes to FHA Mortgage Insurance Announced.

 

The changes that were initially announced to be effective for cases assigned on and after April and June 1st are now effective for cases assigned on and after April 9, 2012 and on and after June 11, 2012 for loan amounts that exceed $625,500. Additional information was also added regarding reduced up-front and annual premiums for certain FHA streamline refinances and applies for cases assigned on and after June 11, 2012.

Warning to all- HUD couldn’t have made it any more confusing for us. We will all be challenged in the coming months with making sure we have communications and systems in place to assure we are using the correct MI premiums as determined by case assignment date, loan term, loan type, loan amount and LTV. Below I have attempted to lay it out in as organized a fashion as I’ve been able to determine after uncrossing my eyes which crossed while reading through the Mortgagee Letter.

Up-Front MIP Increase
If the FHA case is assigned on and after 04/09/2012: UFMIP = 1.75% per Mortgagee Letter 2012-4
• If the FHA case is assigned 10/04/2010 – 04/08/2012: UFMIP = 1.00%

Annual MI Increases
If the FHA case is assigned on or after 04/09/2012 per Mortgagee Letter 2012-4
• > 15 yr Term: > 95% LTV = 1.25%
<=95% LTV = 1.20%
• < = 15 yr Term: > 90% LTV = .60%
>=79% LTV = .35%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).


If the FHA case is assigned 04/18/2011 – 04/08/2012
• > 15 yr Term: > 95% LTV = 1.15%
<=95% LTV = 1.10%
• < = 15 yr Term: > 90% LTV = .50%
>=79% LTV = .25%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).

If the FHA case is assigned on or after 06/11/2012 AND the base loan amount exceeds $625,500 Mortgagee Letter 2012-4:
• > 15 yr Term: > 95% LTV = 1.50%
<=95% LTV = 1.45%
• < = 15 yr Term: > 90% LTV = .85%
>=79% LTV = .60%
• Single Family forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).

Up-Front MIP Decreases for Certain FHA to FHA Streamline Refinances
If FHA case assignment is dated on and after 06/11/2012 and the current FHA loan being paid off was endorsed prior to 06/01/2009 per Case Query in FHA Connection, up-front MIP = .01% and annual MI = .55%.

FHA determined that these increases are necessary to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund. Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013. FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.