February 18, 2013
A recent FHA press release announced changes to the FHA mortgage insurance policy, including higher MIP and other changes.
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. 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.”
Those are significant changes to the FHA loan program, but who is affected by these changes and when do they take effect?
Some borrowers who already have FHA home loans are concerned that the MIP changes might affect their payments. Is this true? Will FHA make these new rules apply retroactively to existing FHA mortgages?
Not according to 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.” The exception mentioned in that sentence applies to what the FHA describes 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)
The 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 read the other Mortgagee Letters referenced here, see the FHA official site Mortgagee Letters page.
Do you have questions about FHA home loans or refinance loans? Ask us in the comments section.
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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