Jan 31, 2013
FHA Announce Changes To Mortgage Insurence Fees
FHA Commissioner Carol Galante announced a series of changes aimed at protecting FHA’s single family insurance programs. The change most likely to affect home buyers is the announced increase to the annual mortgage insurance premium (MIP) of 10 basis points or 0.10 percent. FHA will also increase premiums on jumbo mortgages (loan $625,500 or larger) by 5 basis points or 0.05 percent.
FHA is reversing the policy put into place in 2001 allowing borrowers to cancel MIP premium payments once the mortgage balance fell below 78 percent of the original loan balance. Under the new policy borrowers will be required to pay annual mortgage insurance premiums for the life of the loan. Borrowers with down payments of 10 percent or more may be exempt from the new premium cancelation policy.
Also included in the new policies are stricter underwriting guidelines for borrowers with credit scores below 620 and debt to income ratios above 43 percent. FHA will require manual underwriting for borrowers falling within the aforementioned criteria as well as documentation of compensating factors which supports underwriting decision to approve loans.
The FHA commissioner reaffirms the agency commitment to remain a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers.
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