FHA Monthly Premiums Reduced…Trump says “I Don’t Think So”

Most of us in the mortgage business were excited when HUD released a bulletin stating FHA premiums were going to be reduced on the 1/27/17.  //portal.hud.gov/hudportal/documents/huddoc?id=17-01ml.pdf

Then a few short days later the Mortgage Banker Association released this statement:

“Based on recent testimony and political pushback, we believe there is a strong chance the most recent MIP reduction (as published in HUD) may be one of the rollback actions taken soon after President Trump takes office. This change will likely be effective immediately, and could create significant operational challenges for lenders and their customers. Given this information, MBA encourages members to consider the contingency steps that would be necessary to unwind any changes that have already been made to adjust for the reduced MIP rates if this reversal is implemented. We will continue to provide updates as we receive information.”

The following table reflects the new annual MIP rates which become effective for closing/disbursement dates on or after January 27, 2017.

LTV

New MIP Rate

Term > 15 Years

95.00 %

.55 %

> 95 %

.60 %

Term < 15 Years

90.00 %

.25 %

> 90 %

.50 %

Streamline, Simple Refinance of previous Mortgage endorsed on or before May 31, 2009

Term

New MIP Rate

> 15 Years

.55 %

< 15 Years

.25 %

 

On 1/20/17 the day of Trump’s inauguration HUD released the suspension of the Mortgagee letter 2017-01

//portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee

This is upsetting to most FHA borrowers who wanted to take advantage of the lower monthly mortgage insurance by refinancing. Also, the buying power would of gone up for million of Americans with the lower monthly amount going to mortgage insurance. It isn’t that big of a difference between .85 and .6 on a standard 3.5% down 30 year fixed FHA mortgage but every single dollar helps when families are planning on what price range to buy.  We will see what changes are to come but I don’t think this is enough to stop the real estate market surge that has been going on for years.  As long as the stock market stays at record levels consumer confidence will remain high which leads to a strong real estate market nationwide.

If you have any questions about the changes or have any other questions about your situation please contact us!

Todd McDougall

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