Owners of single-family homes could be paying higher insurance premiums in the coming years thanks to Congress’ recent approval of an FHA request to raise the statutory cap of the annual federal mortgage insurance fee from 0.55 percent to 1.55 percent[1]. Up front mortgage insurance premiums have already been raised (this did not necessitate a Congressional action), and the FHA hopes to “shift some of the premium increase from up-front to the annual costs.”
Currently, it does not appear that the FHA will raise premiums as high as permitted. The chairman of the Mortgage Bankers Association (MBA) has indicated that a small increase in the annual premium costs countered by a decrease in the upfront premium could kill two birds with one stone – both stabilizing the FHA and lowering closing costs for borrowers.
There are a number of changes still in the works for FHA, including an increase in enforcement authority over lenders originating bad loans and alterations on the entity’s multi-family housing regulations. Do you think that these changes are going to ultimately benefit borrowers and lenders?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.dsnews.com/articles/congress-passes-bill-increasing-fha-premiums-2010-08-05
It’ll be fun to watch how they will attempt to sell raising the annual by 1% by lowering the upfront by 1% or even eliminating it completely. But buyers still get the shaft because any annual amount will exceed any upfront costs pretty rapidly.
Of course, most folks will just have to bite the bullet and pay it or wait until alternative mortgage products re-enter the marketplace in which case we’ll find FHA loans once again positioned as the loan of last resort.
Just what we need, more regulalations, that ALWAYS works. Look
at all the past FAILURES.
Look many people cannot afford homes therefore they
should be discouraged or did we learn nothing from
this crisis? Is it better to sale to those that cannot
afford and get the massive defaults? There is still to
much debt that needs to be sorted out before any
real recovery can take place!!!
That’s OK. the President promised….Promised, anyone making under $250k, or was it $235k, or, no, $275k,…….Ah, crap
But he Promised that anyone making under something would not pay anything over something that was said when his wife said she wanted to go to Spain, or something like that… and I wasn’t one of the th other 40 people that the gracious people of America footed the bill. but anyway.
What was the subject again?
Every raise is made to ultimately benefit the lenders.
Who do you think makes these laws?
It is surely not the borrowers!
Sincerely,
David Young
Raising taxes never benefits anyone but government. One more reason to vote conservative on November 2nd and in 2012.