Earlier this year, the FHA and HUD issued a press release about changes to the FHA mortgage insurance policy. The new policy will include alterations to current mortgage insurance premium policy and how long such policies remain in effect.
The short version of the announced changes includes a higher MIP, plus a policy change that will require mortgage insurance to be paid for the life of certain FHA home loans. Some types of refinancing are excluded from the MIP increase.
According to the FHA official site. “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.”
The press release announcing these changes adds, “These premium increases exclude certain streamline refinance transactions. FHA will also require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan.” The “life-of-the-loan” MIP requirement does not take effect at the same time as the MIP rate increase.
FHA Mortgagee Letter 2013-04, which says “The section of this Mortgagee Letter that increases the annual MIP is effective for case numbers assigned on or after April 1, 2013, except as noted below.” That exception applies as follows:
“This Mortgagee Letter increases the annual MIP on all forward mortgages previously announced in ML 2012-4, except single family forward streamline refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009; the rate for those streamline transactions remains at the level announced in ML 2012-4.” (Emphasis ours)
What is the official start date when the new “life-of-the-loan” MIP requirement begins? According to the FHA, the date for loans “with FHA case numbers assigned on or after June 3, 2013,” is when “FHA will collect the annual MIP for the maximum duration permitted under statute.”
To learn more about the policy changes mentioned here, discuss the issue with a loan officer or contact the FHA directly at 1-800 CALL FHA.