Supporters of Federal Housing Administration reforms are using a new Congressional Budget Office report to bolster their claims that Congress needs to pass legislation that allows the FHA to charge risk-based premiums.Compared with private mortgage insurers, the Federal Housing Administration is grossly underpricing its mortgage insurance -- by 50 basis points -- and subsidizing homeowners, according to the CBO report. The report shows that the FHA charges a mortgage insurance premium of 73 bps for all borrowers, while the private MIs charge risk-based premiums ranging from 109 bps for prime borrowers to 287 bps for subprime borrowers with credit scores of 575-599. (Premiums are based on what a borrower would pay annually over eight years.) The CBO estimates that the FHA should charge 123 bps for prime and subprime borrowers under its current premium structure. But this would put the FHA at a competitive disadvantage in attracting prime borrowers, who account for 63% of its business. The CBO report demonstrates that "FHA's current one-size-fits all approach overcharges the majority of its borrowers and undercharges borrowers of higher risk," the National Association of Realtors said.
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A federal judge in Texas dismissed the Consumer Financial Protection Bureau's medical debt rule and prohibited states from passing their own laws prohibiting medical debt on credit reports.
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Dr. Mark Calabria takes on the additional role of chief statistician of the United States; retired Ally Bank executive Diane Morais has joined First Citizens Bancshares' board of directors; MainStreet Bank has promoted Alex Vari to chief financial officer; and more in this week's banking news roundup.
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While refinances are behind the latest increases, the pace of purchase activity may be a stronger indicator of where the housing market sits.
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The share of economists expecting a September rate reduction grew in the July Wolters Kluwer survey, but the October or later percentage also increased.
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Rising home prices and softening sales offer a mixed view of a market that some say is shifting to favor buyers.
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The notes are backed by home improvement installment loans originated by approved dealers in Foundation Finance Company's network.
July 11