Written By: Stacey Sprain, Op-Ed Writer
HUD recently announced two important updates that we all need to be aware of because they are effective in the near future and WILL have affect on the major refinance volume we are moving through right now. Make note of these effective dates because they are significant!
Mortgagee Letter 2010-28 announces the long-awaited changes to FHA Mortgage Insurance Premium structure which will be effective for cases assigned on and after October 4, 2010. The new FHA MI Premium rates apply to all standard FHA purchase and refinance transactions with the exception of Home Equity Conversion Mortgages (HECM), Title I, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian Reservations), Section 223(e) (declining neighborhoods), Section 238(c) (Military Impact areas in Georgia and New York).
Following is a representation of the new FHA MI Premium Structure effective on October 4, 2010:
1.00% for all FHA purchase and refinance transactions (except those programs listed above)
Annual/Monthly MI Premium Rate-FHA purchase and refinance transactions
• Term >15 years:
>95% LTV = .90
<95% LTV = .85
• Term <= 15 years:
>90% LTV = .25
<90% LTV = n/a
For Home Equity Conversion Mortgage (HECM), the up-front MIP remains at 2.0% but the annual/monthly MI premium rate will change to 1.25%.
Mortgagee Letter 2010-24 announced decreases to the maximum combined loan-to-value ratios for FHA refinances. Effective for cases assigned on and after September 7, the maximum CLTV for non-cash out refinance is 97.75, the maximum CLTV for cash out refinance will be 85% and streamline refinances will be capped at 115% CLTV. As of September 7th, the combined amount of the FHA-insured first mortgage and any subordinate lien may not exceed the applicable FHA combined loan-to-value ratio stated herein AND geographical maximum mortgage amount.
About The Author
Stacey Sprain - As an op-ed writer, Ms. Stacey Sprain is currently a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution.