Federal Housing Administration (FHA) Commissioner Carol Galante announced Monday that the agency will be restructuring premiums for all FHA-insured single-family mortgage loans.
Federal Housing Administration (FHA) Commissioner Carol Galante announced Monday that the agency will be restructuring premiums for all FHA-insured single-family mortgage loans. The moves are being made in an attempt to entice private capital into the market and keep the FHA’s mandatory 2 percent reserve threshold intact, according to The Niche Report.
Galante said the premium for new loans less than $625,500 will increase by 0.1 percent, per the Temporary Payroll Tax Cut Continuation Act of 2011. The change will affect all new loans assigned on or after April 1. Additionally, loans greater than that value will see premiums increase by 0.35 percent, under FHA authority, beginning on June 1.
Galante said the agency will also increase upfront premiums from 1 percent to 1.75 percent, effective April 1. The change will apply to all loans regardless of the amortization term or the LTV ratio. Financing of the charge into the mortgage will also remain an option.
The FHA says the upfront premium increase will add approximately $5.00 to the average borrower’s monthly payments. The change will not apply to those already in an FHA-insured mortgage, Home Equity Conversion Mortgages (HECM), and special loan programs which will be outlined in the agency’s Mortgagee Letter.
To read the rest of the story, click here.