July 2, 2020

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FHA Clarifies Mortgage Insurance Premium Cuts


When the FHA announced mortgage insurance premium cuts in the annual, mortgage insurance premium (MIP), there was a preliminary announcement on Thursday January 8th, with details promised to follow. Now the FHA has issued a Mortgagee Letter announcing specifics of those MIP cuts.

FHA Mortgagee Letter 2015-01 states, “This Mortgagee Letter (ML) communicates revised annual MIP rates for FHA Title II forward mortgages and provides opportunity for cancellation of existing case numbers in order to utilize the MIP rates contained in the ML.”

The new rules are effected for FHA loan case numbers assigned on or after January 26 2015. According to the mortgagee letter, the new FHA policy “reduces the rate for annual MIP for all Title II forward mortgages, with terms greater than 15 years, except;

–single family forward streamline refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009;

–Section 247 mortgages (Hawaiian Homelands)

This ML supersedes the annual MIP rates established in ML 2013-4. All other sections of ML 2013-4 remain in effect.”

Some FHA loans eligible for the MIP reductions might fall into a “twilight zone” of timing where they COULD be eligible depending on whether or not a new FHA loan case number can be assigned to them.

For these loans, “To allow mortgagees to obtain the reduced annual MIP rates contained in this ML for loans in process with active FHA Case Numbers, FHA will temporarily approve cancellation requests for active FHA Case Numbers within 30 days of the effective date of this ML.”

Lenders wondering how to do this should know, “FHA will provide operational details on case cancellations through FHA Info notifications and on FHA’s lender information page available at www.hud.gov/lenders.

We will post details on the specifics of the FHA loan MIP reductions in terms of how much according to base loan amount and MIP basis points in another blog post.

Do you have questions about FHA home loans? Ask us in the comments section. You can also follow us on Facebook.

Joe Wallace - Staff Writer

By Joe Wallace

January 10, 2015

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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