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Are FHA costs to rise yet again? You betcha!
The latest HUD budget proposal has the department giving money to everyone, including funding a "self-sufficiency program". Isn't funding a self-sufficiency program proving that it's not self-sufficient? Why is HUD funding this program?
HUD has 2.5 million families in public housing, tenant vouchers for 2.2 million, 10,000 vouchers for the homeless, created 432,000 jobs, and general assistance to 5.5 million homes. HUD's programs do some good and show humanity for our fellow human beings, but why does it all of this have to come out of HUD's budget? Take the programs out of HUD or take it off the books.
What about funding FHA? Is that not a purpose of HUD as well? Raising the mortgage insurance rate on FHA borrowers is NOT the right way to fund every HUD program. How about making FHA a little cheaper for folks with jobs to buy homes, to help our economy, to help stabilize our home prices, and mend the FHA to ensure capitalization minimums are met. Some additional common sense is needed to ensure that the FHA loan program continues to be a viable financing alternative. Video blog on this assault on FHA.
FHA held a briefing this morning on the President’s 2013 budget. On this call, they reiterated the upcoming single family premium changes for FHA loans (outlined below). The upfront premium of 100 bps has not changed. The mortgagee letter is expected March 1, 2012, with an effective date of April 1, 2012. Importantly, these changes are only the first of additional changes expected to be announced within the next few weeks. Although the FHA could not elaborate, the industry should expect additional changes to the premium structure, likely a small increase to the UFMIP. Finally, we expect an announcement of lower premiums for streamlined refinances as a means to help more families refinance without the benefit to borrower impacts.
For loans greater than 15 years, New Annual Premium, Effective April 1, 2012:
LTV less than or equal to 95%
Now:110 bps
Increase:10 bps
New:120 bps
LTV greater than 95%
Now:115 bps
Increase:10 bps
New:125 bps
All loans over $625,500 will incur an additional annual premium increase of 25 bps
Don't forget that the assault on FHA through reducing seller concession maximums is still coming.
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