The record breaking number of foreclosures have really caused a strain on mortgage insurance companies. To help make up for the losses, the FHA recently increased FHA mortgage insurance premiums to help offset some of the losses. The upfront costs were two much for most buyers, who can’t save up for any kind of down payment, so congress recently changed the mortgage insurance premiums so that the up front portion will be less expensive, but the monthly portion will be more costly. Here are some details from the Inman news:
Upfront premiums for FHA mortgage insurance would be rolled back from 2.25 percent to 1 percent on Sept. 7, while annual premiums would nearly double.
FHA had raised upfront premiums from 1.75 percent to 2.25 percent in April, to cope with rising losses on FHA-guaranteed loans. The Obama administration promised to reduce upfront premiums if Congress gave it the authority to raise annual premiums beyond their statutory limit of 0.55 percent.
Legislation raising the statutory limit on annual premiums to 1.55 percent was approved by lawmakers on Aug. 4 and has been presented to President Obama for his signature.
The day after the Senate’s unanimous passage of HR 5981, Stevens said FHA would roll back upfront premiums to 1 percent on Sept. 7, simultaneously increasing annual premiums to 0.85 percent for borrowers with loan-to-value ratios of up to 95 percent and to 0.9 percent for borrowers with higher LTVs.
