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FHA's Refi Barrier

DEC 12, 2011 11:28am ET
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The Federal Housing Administration is on everybody's mind recently. With new jumbo lending authority it is poised to take even more share away from Freddie Mac and Fannie Mae. But will FHA mortgagors refinance? Our Nov. 21 article sparked a number of replies about why it is hard to refi an FHA loan.

Story_Title: FHA: Plenty of Mortgagors Could Refi - But They Won't
Story_Date:  Monday, November 21, 2011

Comments:    Not to mention that by refinancing today the MIP monthly premium will more than double making the ability to drop the payment by 5% next to impossible! Congress needs to do something about that.

Cheryl Dingwell
PeakView Mortgage
Colorado Springs
CO

Story_Title: FHA: Plenty of Mortgagors Could Refi - But They Won't
Story_Date:  Monday, November 21, 2011
Comments:    Correction, the monthly MI (mortgage insurance) has increased from .55 to 1.15% where it stands today.  This unintended consequence is preventing tens of thousands of consumers from being able to refinance as they cannot pass the 5% reduction in PIMI required by HUD due to the higher monthly MI amount.

Paschal Curtin
AmericaHomeKey, Inc
San Diego CA

Story_Title: FHA: Plenty of Mortgagors Could Refi - But They Won't
Story_Date:  Monday, November 21, 2011

Comments:    The real reason more people are not refinancing their FHA loans is because FHA changed the program.  Since the monthly MI is now higher, the payment does not decrease for most borrowers even with the lower rate, or decrease enough to pass FHA's test for refinancing.  I have plenty of borrowers who would like to refinance, but it does not pay them to do so with the MI monthly now being so much higher.

Karen Grothen
Capital City Mortgage, Inc
Lincoln
NE

Story_Title: FHA: Plenty of Mortgagors Could Refi - But They Won't
Story_Date:  Monday, November 21, 2011
Story_id:    1027542
Comments:    Good Afternoon,

HUD left out the real reason why people with existing FHA mortgages aren't refinancing and it is because they have increased the UFMIP to an outrageous 1.15%.  Anyone who refi'd prior to 4/2011 has an UFMIP of .55 to 0.90 and with the new MI they can't meet the 5% required reduction in PIMI which is now mandated by HUD.  I guess they forgot to mention that.

Paschal Curtin
AmericaHomeKey, Inc
San Diego
CA

Story_Title: FHA: Plenty of Mortgagors Could Refi - But They Won't
Story_Date:  Monday, November 21, 2011
Comments:    The reason FHA borrowers wont refinance is that there is no savings for them.  They can lower their rates significantly but with monthly PMI premiums for FHA mortgages doubled it eats all the savings they will have by reducing the rate.  They don't pass the benefit to the borrower test in reducing their monthly payment by a certain percentage.

Robert Rodrick
Wells Fargo Home Mortgage
Plymouth
MA

Comments (6)
This is a really intelligent way to answer the quseiotn.
Posted by | Sunday, December 18 2011 at 9:46AM ET
I'll try to put this to good use imedmaitely.
Posted by | Tuesday, December 20 2011 at 9:33PM ET
Hallelujah! I needed this-you're my saiovr.
Posted by | Friday, January 13 2012 at 11:56AM ET
What's it take to become a sublime expounder of prose like yusorlef?
Posted by | Sunday, January 15 2012 at 8:59AM ET
Hey, good to find someone who aerges with me. GMTA.
Posted by | Monday, January 16 2012 at 1:06AM ET
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