New FHA Refinance Starting in June. Lowered Mortgage Insurance ...

New FHA Refinance Starting in June. Lowered Mortgage Insurance Premiums.

Date: March 6, 2012

To: All Approved Mortgagees

Mortgagee Letter 12-4

Subject Single Family Mortgage Insurance: Annual and Up-Front Mortgage
Insurance Premium ? Changes
Purpose This Mortgagee Letter (ML) announces changes to the FHA Single
Family Annual Mortgage Insurance Premium (Annual MIP) and Up-
Front Mortgage Insurance Premium (UFMIP). Changes are applicable
to all Single Family (SF) Forward Mortgage programs except those
noted in the section below titled, ?Exceptions to Announced Premium
Changes?. Current Annual MIP and UFMIP remain unchanged for those
excepted programs and products at this time.
Effective Date These changes are effective for FHA case numbers assigned on or
after April 9, 2012, unless otherwise specified below.
Mortgagees must continue to comply with the requirements of
ML 2011-10 concerning requests for, and cancellation of, FHA case
numbers. Specifically, mortgagees must:
request case numbers only when they have an active loan application
for the subject borrower and property; and
certify at the time of requesting a case number that they have an
active loan application for the subject borrower and property; and
provide the subject borrower?s name and social security number for
all new construction (proposed construction and existing
construction less than one year old).
Continued on next page
2
Mortgagee Letter 12-4, Continued
Affected Topics
Below is a list of the blocks in the subject handbook that are affected.
HUD 4155.2 Lender?s Guide to Single Family Mortgage Insurance Process
7.3.e, Reference Chart: UFMIP and Annual MIP for Mortgages with Terms More Than 15 Years
7.3.f, Annual Premiums for Mortgages with Terms More Than 15 Years
7.3.g, Reference Chart: UFMIP and Annual Premiums for Mortgages with Terms Less Than 15 Years
Increase to Annual Mortgage Insurance Premium
On December 23, 2011, the President signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (Public Law 112-78), which requires FHA to increase the Annual MIP it collects by 10 basis points (bps). This change is effective for case numbers assigned on or after April 9, 2012.
The table below shows the new effective annual premium rates by amortization term, base loan amount and LTV ratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date.
Term > 15 Years
Base Loan Amount
LTV
Effective
Annual MIP
Any Amount
? 95.00%
April 9, 2012
120 bps
Any Amount
> 95.00%
April 9, 2012
125 bps Term ? 15 Years with LTV above 78%
Any Amount
? 90.00%
April 9, 2012
35 bps
Any Amount
> 90.00%
April 9, 2012
60 bps
Note: SF forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).
Continued on next page
3
Mortgagee Letter 12-4, Continued
Increase to Annual Mortgage Insurance Premium on Mortgages with a High Outstanding Base Loan Amount
FHA is also exercising its pre-existing statutory authority to add an additional 25 bps to mortgages with base loan amounts exceeding $625,500. This change is effective for case numbers assigned on or after June 11, 2012.
The table below shows the new effective annual premium rates by amortization term, base loan amount and LTV ratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date.
Term > 15 Years
Base Loan Amount
LTV
Effective
Annual MIP
? $625,500
? 95.00%
June 11, 2012
120 bps
? $625,500
> 95.00%
June 11, 2012
125 bps
Above $625,500
? 95.00%
June 11, 2012
145 bps
Above $625,500
> 95.00%
June 11, 2012
150 bps Term ? 15 Years with LTV above 78%
? $625,500
? 90.00%
June 11, 2012
35 bps
? $625,500
> 90.00%
June 11, 2012
60 bps
Above $625,500
? 90.00%
June 11, 2012
60 bps
Above $625,500
> 90.00%
June 11, 2012
85 bps
Note: SF forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).
Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions
For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after
June 11, 2012.
Continued on next page
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Mortgagee Letter 12-4, Continued
Increase to
Up-Front Mortgage Insurance Premium
The UFMIP for affected SF forward mortgages will be increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage and will continue to calculate actual premium charges against the base loan amount before adding any financed UFMIP. This change is effective for case numbers assigned on or after April 9, 2012.
Decrease to
Up-Front Mortgage Insurance Premium on Certain Streamline Refinance Transactions
For all SF Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before
May 31, 2009, the UFMIP will decrease from 1 percent to 0.01 percent of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.
Exceptions to Announced Premium Changes
The changes specified in this ML apply to all mortgages insured under FHA?s Single Family Mortgage Insurance Programs except:
Title I
Home Equity Conversion Mortgages (HECM)
Section 247 (Hawaiian Homelands)
Section 248 (Indian Reservations)
Section 223(e) (Declining Neighborhoods)
Continued on next page
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Mortgagee Letter 12-4, Continued
Please address any questions about the topics in this Mortgagee Letter to the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number via TTY by calling the Federal Information Relay Service at 1-800-877-3339.
Signature
__________________________________
Carol J. Galante
Acting Assistant Secretary for Housing ? Federal Housing Comm

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