One of the results of the mortgage crisis is the movement to reform the agencies and GSE's - primarily Fannie Mae, Freddie Mac, and FHA. Much of this push worries me a good bit about the potential to harm a system that for decades was successful in building home ownership in the US. The FHA Reform Act though seems to provide some flexibility and tools to enable FHA to manage more effectively its risk and its insurance funds.
In the bill there are provisions to:
- Allow FHA to ncrease the Annual Mortgage Insurance premium.
- Allow charging annual mortgage insurance premiums to be discretionary
- Authorize HUD to require that lenders indemnify for mortgage insurance claims if the "Mortgage was not originated or underwritten in accordance with HUD requirements."
- Allows HUD to set up additional controls and systems to manage and address credit risk and early defaults and claims and lender compliance with underwriting standards - with the goal of safety and soundness of the "Mutual Mortgage Insurance Fund."
The annual mortgage premium is the portion of the FHA mortgage insurance that is in the monthly mortgage payment. FHA has requested this flexibility to modify monthly premiums. There is the possibility that this will allow the up front mortgage premiums to be reduced.
These changes are in response to the reviews subsequent to the insurance fund reserve falling below Congressional mandated levels. The reviews seemed to point to a concentration of delinquency problems with select lenders, a need to revamp some of the underwriting standards, and a need to monitor more closely application of underwriting standards at the origination level.
These changes seem to be mostly positive for the agency and for the industry.
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Richard Smith |
American Acceptance Mortgage, Inc |
FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation
Home financing in Tennessee and Georgia.
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Stearns Lending, Inc |
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. |
Not good at all......I don't mind pushing back on lenders that don't follow the guides, but the increase in the MIP is not good.
Larry, I need to look back a little, but I believe HUD had asked for the authority to increase the monthly MI in order to drop back a little on the UFMIP.
I am OK with the increase, if it stabilizes the insurance fund.
I wish conventional could compete with FHA so we wouldn't have to deal with FHA guidelines.
I wish conventional could compete with FHA so we wouldn't have to deal with FHA guidelines.