As expected, with the passage of the HUD reform bill (HR 5981) by Congress two weeks ago, HUD recently announced they are lowering UFMIP to 1.00% and raising MIP to 85 – 90 bps from 50-55 bps (depending on the LTV). The bill gives HUD the authority to raise the MIP to 1.55 bps but indications are they have no intention (at least not yet) of requiring the maximum allowed.
This will lead to payment changes for the borrower. In short, the qualification process becomes slightly more challenging based on DTI, but not significantly. A lowered rate by 1/4% will overcome the difference created by the increase in MIP.
This change is expected to be effective for case numbers obtained on Sept 7, 2010 and thereafter. This could lead to a slight rush in case numbers ordered prior...
Very important to be mindful of the calendar!!!
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ReplyDeleteI like your blog and different topics you cover. I think the changes FHA is making will hurt FHA's reserves because it reduces the initial monies collected for the first 3-5 years until the increased MIP kicks in. Then they will kick it up to 1.5%. I wrote a blog post that discuss this http://homeloanartist.com/2010/08/11/important-changes-to-fha-insurance-premiums-why-california-homebuyers-should-care/
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