FHA Eyes MI Premium Hike

The Department of Housing and Urban Development is preparing to go back to the old standard of charging all Federal Housing Administration borrowers the same upfront mortgage insurance premium starting on Oct 1 -- only this time the premium will be higher. HUD officials are telling industry groups that a notice of the across-the-board MI premium increase might be issued next week. "They are running models right now to see how much we should raise it," a HUD official told MortgageWire. FHA lenders have been charging risk-based premiums since July 14. But a recently passed housing bill requires the FHA to stop risk-based pricing by Oct. 1. Before July 14, the FHA charged a standard 1.5% upfront mortgage insurance premium. Some estimate that the FHA will raise the upfront premium at least 25 basis points.