March 12, 2012
The Obama Administration announced two initiatives to help homeowners and their families. The Administration is reducing fees for Federal Housing Administration (FHA) borrowers seeking to refinance and providing relief to servicemembers and veterans.
FHA is reducing both the upfront and annual fee for FHA borrowers looking to utilize the streamline refinance to take advantage of historically low interest rates. For loans originated prior to June 1, 2009, the upfront premium is reduced to .01 percent and the annual fee is reduced to .55 percent. HUD released Mortgagee Letter 12-4, which outlines all the MIP changes; increases for new purchase transactions and decreases for streamline refinances.
The announcement includes several efforts to support servicemembers and veterans who were wrongfully foreclosed upon, wrongfully charged higher interest rates, and who were forced to sell their home for a loss due to a permanent change in service. Foreclosure protections under the Servicemembers Civil Relief Act (SCRA) are being expanded and $10 million will be paid into the Veterans Housing Benefit Program Fund. This relief will be provided by loan servicers Bank of America, JP Morgan Chase, Ally, Citi, and Wells Fargo.