Yes, as soon as I advised everyone to wait for FHA’s announcement, it was released. FHA released the mortgagee letter today finalizing the changes in monthly and upfront mortgage insurance.
The changes are effective for any case numbers ordered on or after October 4, 2010. The changes apply to all traditional FHA purchase and refinance mortgages, including FHA and FHA streamlines.
The Up Front Mortgage Insurance Premium will now be one percent of the base loan amount. The monthly mortgage insurance will depend on the loan-to-value (LTV) ratio. Loans with an LTV of 95 percent or less will be subject to a monthly mortgage insurance payment of 85 basis points. Loans with an LTV exceeding 95 percent will be subject to a monthly mortgage insurance payment of 90 basis points. These changes only apply to amortization periods greater than 15 years. Guidelines for loans with amortization periods of 15 years or less remain unchanged.
Wednesday, September 1, 2010
What is going on with FHA mortgage insurance?
We continue to receive multiple questions regarding the implementation date of FHA’s changes in the monthly mortgage insurance premium as well as the Up Front Mortgage Insurance Premium (UFMIP). As you may know, Congress passed H.R. 5981 which increased the statutory limit on monthly mortgage insurance 1.55 percent. This does not mean the monthly mortgage insurance premium will increase to 1.55 percent, but does mean HUD has the authority go to as high as 1.55 percent. Currently, HUD has the statutory authority to charge up to 3.0 percent on the UFMIP but only charges 2.25 percent.
A few days after the passage of H.R. 5981, Commissioner Stevens, Federal Housing Commissioner, released a statement which included the following:
"It is our intention that effective on September 7, 2010, FHA’s upfront mortgage 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…"
Notice the words “intention” and “mortgagee letter will be forthcoming”. A few days later, Deputy Assistant Secretary, Vicki Bott, released a statement, which included the following:
"Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010."
Again, notice “intention” and “as we work to publish a mortgagee letter.” In the release, Deputy Assistant Secretary Bott clarified that HUD’s intention was to simultaneously decrease the UPFMIP to 1.0 percent and increase the monthly MIP to 85-90 basis points on amortization periods over 15 years.
Bottom line…we still do not know the exact details of the change including the implementation date or the amount. We will post the final details as soon as we see the mortgage letter announcing the change.
A few days after the passage of H.R. 5981, Commissioner Stevens, Federal Housing Commissioner, released a statement which included the following:
"It is our intention that effective on September 7, 2010, FHA’s upfront mortgage 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…"
Notice the words “intention” and “mortgagee letter will be forthcoming”. A few days later, Deputy Assistant Secretary, Vicki Bott, released a statement, which included the following:
"Last week, FHA Commissioner David H. Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. As we work to publish a Mortgagee Letter, it is our intention to announce that based on industry feedback and our desire to have this change implemented successfully in the marketplace, FHA will make the premium fee changes on all new case numbers effective October 4, 2010."
Again, notice “intention” and “as we work to publish a mortgagee letter.” In the release, Deputy Assistant Secretary Bott clarified that HUD’s intention was to simultaneously decrease the UPFMIP to 1.0 percent and increase the monthly MIP to 85-90 basis points on amortization periods over 15 years.
Bottom line…we still do not know the exact details of the change including the implementation date or the amount. We will post the final details as soon as we see the mortgage letter announcing the change.
Tuesday, August 31, 2010
Last Chance for Discounted Continuing Education
Tonight is your last chance to take advantage of our summer special!! Discounted continuing education lasts until midnight tonight!! The hours are ticking away...
Thursday, August 26, 2010
Stop Procrastinating Mortgage Brokers!!
Stop Procrastinating and sign up for Praedo Institute's 3-hour SAFE preparation course that will count for 3 hours of mortgage continuing education and will help loan originators prepare for the SAFE exam. The course will be held at the Salt Lake Community College Miller Campus at 9750 South 300 West in Sandy from 9 am -12 pm on September 16. There are still seats available, but they are going quick!! Sign up today!
Tuesday, August 24, 2010
Transfer Fee Battle is Heating Up
A few years ago, builders started imposing transfer fees on the homes that they sold. Most of the buyers didn't care because the fee didn't show up until they sold the house and then it was the new buyer's responsibility to pay for the fee. But things are starting to heat up in Washington as these transfer fees are being further investigated. Transfer fees have been more accepted in the past as they were usually found in the selling of condominiums and smaller homes where the funds would be used to pay for the maintenance and general upkeep of the housing project. The issue that has everybody up in arms over is the fact that these new transfer fees are doing nothing other than lining the pockets of builders (often for 99 years).
In a booming real estate market, we would probably see these fees getting swept under the rug. But in a weaker economy, everything is under the spotlight, especially in the real estate market. With so much opposition and press on transfer fees, we could see some federal regulation that would ban these fees very soon. The FHA has already proposed a rule that would restrict Fannie Mae and Freddie Mac from purchasing homes with these types of fees. I'm sure we will see more on this very soon.
In a booming real estate market, we would probably see these fees getting swept under the rug. But in a weaker economy, everything is under the spotlight, especially in the real estate market. With so much opposition and press on transfer fees, we could see some federal regulation that would ban these fees very soon. The FHA has already proposed a rule that would restrict Fannie Mae and Freddie Mac from purchasing homes with these types of fees. I'm sure we will see more on this very soon.
Thursday, August 19, 2010
Recovery Really Means Stabilization
In today's real estate market, we need to better understand what recovery really means. Many people, both in and out of the real estate industry, are waiting for loan programs to come back and prices to go back up. Financial recovery in our real estate market is all bout stabilization rather than recovery. Last month new construction was up 24%. That sounds great, but it really balances out when you factor in the 37% drop in new construction after the expiration of the home buyer tax credit. So pay attention to what's evolving in the market so you can improve your business and be the reliable agent or broker that your clients expect.
Wednesday, August 4, 2010
Seats Still Available at Utah SAFE Prep Course!
Tomorrow Praedo Institute will be hosting a 3-hour SAFE preparation course that will count for 3 hours of mortgage continuing education and will help loan originators prepare for the SAFE exam. The course will be held at the Salt Lake Community College Miller Campus at 9750 South 300 West in Sandy from 9 am -12 pm. There are still seats available! Sign up today!
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