West Palm Beach & Jupiter, Florida Based Mortgage Broker Christian Penner reveals Changes to the FHA Mortgage Insurance Premiums, from the Mortgagee Letter 2012-04 announced to all standard single family forward mortgages. The Obama administration is offering some relief to homeowners who have government-backed mortgages. There are the 5 important Things You Need to Know About These Changes.
West Palm Beach, FL -- (ReleaseWire) -- 03/12/2012 --FHA Changes Mortgage Insurance Premiums
Mortgagee Letter 2012-04 announces changes to all standard single family forward mortgages.
This ML makes official the announcements made via recent HUD press releases.
Here are the 5 Things You Need to Know About These Changes:
1. Effective April 9th, 2012, Annual MIP will increase for all standard FHA loans < $625,000.
2. Effective June 11th, 2012, Annual MIP will increase for all standard FHA loans > $625,000.
3. Loans with a 15 year term and an LTV < 78% remain exempt from the Annual MIP.
4. Effective June 11th, 2012, for streamline refinances of loans that were endorsed on or before May 31st, 2009, qualify for an Annual MIP of 0.55% and an Up Front Premium of 0.01%.
5. Effective April 9th, 2012, the Upfront MIP is increased to 1.75% for all standard FHA loans.
To read this update in full and view the new MIP rate charts.*
* Please note that the effective date of June 11th, 2012 for loan amounts < $625,000 (listed on the chart on page 3 of the Mortgagee Letter) may actually be April 9th, 2012; FHA will need to clarify this.
Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or afterJune 11, 2012.
Decrease to Up-Front Mortgage Insurance Premium on Certain Streamline Refinance Transactions For all SF Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or beforeMay 31, 2009, the UFMIP will decrease from 1 percent to 0.01 percent of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.
HUD No. 12-045
HUD Public Affairs
March 6, 2012
FHA ANNOUNCES PRICE CUTS TO ENCOURAGE STREAMLINE REFINANCING
Millions of FHA borrowers could save average of $3,000 a year
WASHINGTON – Today, Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA’s Streamline Refinance Program that could benefit millions of borrowers whose mortgages are currently insured by FHA. Beginning June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduce its annual premium to .55 percent for certain FHA borrowers.
To qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009. Late last month, FHA also announced it will increase its upfront premiums on most other loans by 75 basis points to 1.75 percent. In addition, FHA will raise annual premiums 10 basis points and 35 basis points on mortgages higher than $625,500. Read FHA’s new Mortgagee Letter.
“This is one way that FHA can make a real difference to help homeowners who are doing the right thing, paying their bills on time and want to take advantage of today’s low interest rates,” said Galante. “By significantly reducing costs for these borrowers, we can make certain they cut their monthly mortgage burden which will benefit the housing market and the broader economy in the process.”
Currently, 3.4 million households with loans endorsed on or before May 31, 2009, pay more than a five percent annual interest rate on their FHA-insured mortgages. By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month. FHA’s new discounted prices assume no greater risk to its Mutual Mortgage Insurance (MMI) Fund and will allow many of these borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional underwriting. FHA-insured homeowners should contact their existing lender to determine their eligibility.
Last month, the Obama Administration announced a broad package of actions and legislative proposals to help responsible homeowners save thousands of dollars through refinancing. This includes the changes announced today that will benefit current FHA borrowers – particularly those whose loan value may exceed the current value of their home. By lowering monthly mortgage costs for home-owners, FHA hopes to help more borrowers stay in their homes, thereby decreasing the potential for future default and reducing losses to the Mutual Mortgage Insurance (MMI) Fund.
The changes outlined in today’s mortgagee letter apply to all mortgages insured under FHA’s Single Family Mortgage Insurance Programs except:
Home Equity Conversion Mortgages (HECM)
Section 247 (Hawaiian Homelands)
Section 248 (Indian Reservations)
Section 223(e) (Declining Neighborhoods)
Read FHA’s Mortgagee Letter on new premium changes.
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WASHINGTON -- The Obama administration is offering some relief to homeowners who have government-backed mortgages. Under a program President Barack Obama unveiled Tuesday, the government would cut the fees it charges to insure those borrowers.
The idea is that lower fees would persuade millions to refinance their loans while interest rates are near record lows. It's the administration's latest attempt to minimize the damage from the foreclosure crisis and help more people keep their homes.
Here's a look at the program:
Q: What has the administration proposed?
A: Borrowers with mortgages insured by the Federal Housing Administration could refinance at half the current fee. A lower fee would follow years of rising mortgage insurance premiums. FHA is also reducing an up-front premium when it initiates a loan. The FHA charges the fees on top of standard interest rates because it backs riskier borrowers.
Q: Who's eligible?
A: The administration estimates 2 million to 3 million homeowners. Most are first-time or low-income homebuyers. The FHA requires only a 3.5 percent down payment. And borrowers don't have to prove that they're employed. FHA borrowers can also refinance even if they're "underwater," or owe more on their mortgage than their home is worth.
Q: How much will those who get the reduced fees actually benefit?
A: The fee is now 1.15 percent of the mortgage balance each year. Those fees are unappealing to many borrowers who want to refinance. The plan would cut the fee to 0.55 percent. The current up-front premium would also be lowered, from 1 percent of the loan balance to .01 percent. As a result, a borrower who owed $175,000 on their mortgage could save about $1,750 in one-time fees and more than $1,000 per year in annual fees by refinancing. The borrower could save nearly $150 a month more if the interest rate declined from 5 percent to 4 percent.
Q: Can those who are eligible be excluded from other government housing programs?
A: Most of the other federal housing programs, including its signature refinancing and mortgage modification programs, target other types of homeowners. So there's little overlap with the FHA's refinancing plan. For example, the administration's refinancing and mortgage modification programs are for homeowners whose mortgages are owned or backed by government-controlled Fannie Mae and Freddie Mac, not the FHA.
Q: Will it work?
A: Possibly, if the reduced fees are well-advertised and borrowers are confident of saving on their mortgage payments by refinancing. If homeowners are wary of paying even a small amount to refinance, the program could fail to reach millions who are eligible. Economists said the lower fees are a modest way to help the troubled housing market but won't turn it around. "The only thing that will do that are low interest rates and job growth," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. Stan Humphries, chief economist at the real estate website Zillow.com, predicted that a separate plan to compensate military service members who were wrongfully foreclosed upon would be a big help to that group. It's unclear how many military service members would benefit.
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