HUD Announces Changes to FHA
On Jan. 30, 2013, the Federal Housing Administration’s (FHA) Commissioner Carol Galante announced a series of changes to be issued this week that manage risk and further strengthen the heath of FHA’s Mutual Mortgage Insurance Fund (MMI Fund):
- The Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed R.ate HECM pricing options will be consolidated. This change will be effective for FHA case numbers assigned on or after April 1, 2013. Please see Mortgagee Letter 2013-01.
- The annual mortgage insurance premium (MIP) for most new mortgages will increase by 10 basis points, or by 0.10 percent. Premiums on jumbo mortgages ($625,000 or larger) will increase by 5 basis points, or 0.05 percent. These premium increases exclude certain streamline refinance transactions.
- FHA will require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan. Please see Mortgagee Letter 2013-04.
- Lenders will have to manually underwrite loans for borrowers with a decision credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent.
- Downpayment requirements for mortgages with original principle balances above $625,500 will be raised from 3.5% to 5%. A federal register notice will be published the first week in February.
- Greater oversight will be required on borrowers who are trying to obtain a new FHA loan 3 years following a foreclosure.