Posters at our discussion board at
Backgroundgrrl: It's official: FHA hike of 75 bps will come April 1. The Federal Housing Administration is following through with its pledge to increase upfront and annual insurance premiums on its forward single-family business.
BigHappy: That is not good.
Ol'canuckle head: Recovery? We don't need no stinkin' recovery! Now all they have to do is make sure they get rid of the tax deductibility of private mortgage insurance.
Dr. Branker: My clients today asked if they can expect the mortgage interest deduction to continue. I said, "No comment."
In HUD's defense, they do need to remain solvent, or the Department of Defense will be siphoning off the HUD Insurance Fund to cover the invasion of Iran. One or the other.
TheKyle: It will "have minimal impact on the market and borrowers." Right...
Ol'canuckle head: Did anyone read the press release? "FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month."
On a $200,000 purchase with an estimated interest rate of 4%, the payment would increase only $7, but with the increase to the monthly premium of 10 bps, the monthly payment goes up $26. Is $26 a big deal? It is to some.
Dr. Branker: When rates go to 8% it will be a big deal.
Snapper: I don't recall anyone making a big deal out of the premium or knowing that the premium increased. Everyone seems to realize they are paying the price for our mistakes.
The premium was 3.8% in the 80s or did I dream that?
StephenF: What world (a k a economy) are these guys living in?
Ol'canuckle head: Branker, unless my math is off, at 8% interest rate the payment difference only increases another $4 a month versus the scenario at 4%.
Turdly: One where I'm aware of my limitations. One where $26 differential isn't impactful to my situation. One where anyone in that position shouldn't contemplate buying a house.
Sfranny: So now it's a 1.25 factor on monthly and 1.75% upfront? Nothing like screwing the homebuyers to pay for the deadbeats' unemployment insurance. This has nothing to do with their reserve fund; it's about the Democrats funding their handouts.
FHA question—Is there a minimum amount of time you have to keep an FHA loan? Say if someone refinances and decides to sell in a year. Any minimum time before it's assumable?
Jon Elwell: From the guide, "FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year."
If a borrower's circumstances change that requires them to move within one year HUD does not take action against the borrower.
An assumption within the first year may cause a problem with the servicer that must approve the assumption. After one year there is certainly no issue.
MarylandDave: FHA rocket scientists, is this statement true? For FHA purchase transactions with subsequent multiple streamline refis, your monthly mortgage insurance will drop off when the outstanding principal balance drops to 78% of the original purchase price and no sooner than five years after the initial FHA transaction (i.e., purchase settlement date)?
Dust10b: Not sure about the initial part of the statement. One big gotcha is that technically it drops off once the balance is schedule to hit 78% of the original purchase price/appraised refi value (if full refi), based on the amortization schedule.
Driver 8: The five-year statement is correct.
Sfranny: Yeah that's another jacked up thing with FHA—78% of original purchase price. People buying in this market are going to get jacked for 1.15% mortgage insurance for 10 years. Got to pay for those public housing programs. At least conventional you can pay for appraisal to have removed.
M fig: Anyone know of a FHA lender that will go to (a credit score of) 600? We will need to sign up as a broker.
StephenF: Just as a head-up, before you sign up ask for the overlays for 600 FICOs. The program is FHA in name only; at least that has been my experience
BigHappy: If you get set up with this program then you want to use it as a marketing tool, not a business model.
Upstatemortgageguy: What state? I agree with Big Happy; I will go down to 560 case by case. But I will not do just any loan. There better be a good reason for the low FICOs and very good compensating factors.
