FHA Mortgage Insurance (MMI)           

Effective for all loans originated on or after October 1, 2008, HUD place a moratorium on it's risked based premium.  The new premiums are listed below.

You may find information on Mortgage insurance prior to July 14, 2008 here.  Mortgage Insurance Prior to 7/14/2008.

You may find Mortgage Insurance Premium info for the period of July 14, 2008 to September 30, 2008 here.  Mortgage Insurance from July 14 - Sept. 30, 2008

The Housing and Economic Recovery Act of 2008 provides for a one-year moratorium on the implementation of FHA’s risk-based premiums beginning October 1, 2008.  Consequently, effective with new FHA case number assignments on or after that date, FHA will no longer base its mortgage insurance premiums on a combination of credit bureau score and loan-to-value ratio. The new premiums (upfront and annual) to be implemented for all loans for which a case number is assigned on or after October 1, 2008, are described below.  Mortgagee Letter 2008-16 is rescinded in its entirety.  Please note that certain parts of that mortgagee letter are retained and reiterated in the guidance that follows.

Upfront Premiums:  FHA will charge an upfront premium in an amount equal to the following percentages of the mortgage:   

• Purchase Money Mortgages and Full-Credit Qualifying Refinances, Cash Out Refi = 1.75 Percent

• Streamline Refinances (all types) = 1.50 Percent

• FHASecure (Delinquent Mortgagors) = 3.00 Percent.  

Annual Premiums:  An annual premium, shown in basis points below, to be remitted on a monthly basis, will also be charged based on the initial loan-to-value ratio and length of the mortgage (except for FHASecure delinquent mortgages) according to the following schedule:

• Purchase Money Mortgages, Full-Qualifying Refinances, and Streamline Refinances:

• FHASecure (delinquent mortgagors):

Highlights Regarding FHA’s Mortgage Insurance Premiums

·        All loans to borrowers with a credit score must be risk-classified by FHA’s TOTAL Mortgage Scorecard.

·        Borrowers with decision credit scores below 500 and with loan-to-value ratios at or above 90 percent are not eligible for FHA-insured mortgage financing.

·        Borrowers without credit bureau scores will need to be manually underwritten and deemed as eligible based on criteria described in Non-traditional credit guidelines.

·        Eligibility for delinquent mortgagors under the new Cash Out guidelines effective January 1st, 2009 are posted in the Cash Out refinance section.

Borrowers who refinanced their delinquent non-FHA ARM loan into FHASecure and subsequently wish to refinance to another FHA-insured mortgage must use a refinance product that requires full qualifying, e.g., a rate and term refinance.  Once the FHA-to-FHA full qualifying refinance is insured, these borrowers will be able to take advantage of FHA’s Streamline Refinance program.

First-Time Homebuyer with HUD-Approved Pre-Purchase Counseling

The Housing and Economic Recovery Act also provides for a reduction of the upfront premium from 3.00 to 2.75 percent for first-time homebuyers (as defined below) who complete HUD-approved pre-purchase counseling.  However, since no premium for purchase money mortgages will exceed 1.75 percent through September 30, 2009, there will be no reduction in the upfront premium for counseled first-time homebuyers.  For loans after September 20, 2009 you can read the guidelines on first time buyers.

Programs Covered by Insurance Premiums Shown Above

 The upfront and annual premiums and the requirements described in this mortgagee letter apply to those forward mortgages insured under FHA’s Mutual Mortgage Insurance (MMI) fund; the Section 203(k) rehabilitation mortgage insurance program; and individual condominium units insured under Section 234(c).  These premiums do not apply to mortgages insured under Title I of the National Housing Act, nor to reverse mortgages under FHA’s Home Equity Conversion Mortgage (HECM). These premiums also do not apply to Section 223(e)(declining neighborhoods), Section 238(c)(Military Impact areas in Georgia and New York), Section 247 (Hawaiian Homelands), and Section 248 (Indian Reservations).

Refinance Transactions

The mortgage insurance premium for refinance transactions will depend on the type of refinance (e.g., rate-and-term; streamlined FHA-to-FHA refinance; or Cash Out), the loan-to-value ratio, and the term of the mortgage.  

Full Qualifying Refinances (e.g., rate-and-term; Cash Out refinance of a conventional or FHA mortgage not presently delinquent;  any that require complete underwriting except delinquent loans being refinanced under FHASecure).  These refinances are subject to the same mortgage insurance premiums as purchase money mortgages shown above.  

Streamline Refinances.  The mortgage insurance premiums charged are based on the loan-to-value ratio (either the calculated LTV based on the existing mortgage, or a new LTV based on a new FHA-appraisal) and the term of the mortgage.  

Borrowers who refinanced their delinquent non-FHA ARM into an FHASecure mortgage are not eligible to streamline refinance their FHASecure mortgage.  The refinance transaction subsequent to the FHASecure mortgage must be a full qualifying refinance.

Previous Case Number.  To determine the case number of the loan being refinanced, lenders may use the Case Query screen in FHA Connection using the borrower’s name, address and/or social security number.