Hud is making changes to the MIP premiums

0

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSINGFEDERAL
HOUSING COMMISSIONER
www.hud.gov espanol.hud.gov
January 31, 2013
To: All Approved Mortgagees
Mortgagee Letter 2013-04
Subject Revision of Federal Housing Administration (FHA) policies concerning
cancellation of the annual Mortgage Insurance Premium (MIP) and increase
to the annual MIP
Purpose Consistent with FHA’s ongoing efforts to strengthen the Mutual Mortgage
Insurance Fund, FHA is:
 revising the period for assessing the annual MIP;
 removing the exemption from the annual MIP for loans with terms of 15
years or less and Loan to Value (LTV) ratios of less than or equal to 78
percent at origination; and
 increasing the annual MIP on all forward mortgages except single family
forward streamline refinance transactions that refinance existing FHA
loans that were endorsed on or before May 31, 2009 (see ML 2012-4).
Effective Date The section of this ML that increases the annual MIP is effective for case
numbers assigned on or after April 1, 2013, except as noted below.
The following sections of this ML are effective for all mortgages with FHA
case numbers assigned on or after June 3, 2013:
 revision to the period for assessing the annual MIP;
 removal of the exemption from the annual MIP for loans with terms of 15
years or less and LTVs of less than or equal to 78 percent at origination;
 increase in the annual MIP for mortgages with terms less than or equal to
15 years and LTV ratios less than or equal to 78 percent at origination.
Continued on next page
2
Mortgagee Letter 2013-04, Continued
Affected Topics This ML:
 rescinds the automatic cancellation of the annual MIP collection
announced in MLs 2000-38 and 2000-46;
 rescinds ML 2011-35, under which mortgages with terms of 15 years or
less and LTVs of less than or equal to 78 percent at time of origination
were exempt from the annual MIP; and
 rescinds and updates Sections 7.3.a, 7.3.c, 7.3.d, 7.3.e, 7.3.f, and 7.3.g of
HUD Handbook 4155.2 as appropriate.
This ML increases the annual MIP on all forward mortgages previously
announced in ML 2012-4, except single family forward streamline refinance
transactions that are refinancing existing FHA loans that were endorsed on or
before May 31, 2009; the rate for those streamline transactions remains at the
level announced in ML 2012-4.
Revision to the
Period for
Assessing
Annual MIP
For loans with FHA case numbers assigned on or after June 3, 2013, FHA
will collect the annual MIP for the maximum duration permitted under
statute. See 12 U.S.C. § 1709(c)(2)(B).
 For all mortgages regardless of their amortization terms, any mortgage
involving an original principal obligation (excluding financed Up-Front
MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will
be assessed until the end of the mortgage term or for the first 11 years of
the mortgage term, whichever occurs first.
 For any mortgage involving an original principal obligation (excluding
financed UFMIP) with an LTV greater than 90 percent, FHA will assess
the annual MIP until the end of the mortgage term or for the first 30 years
of the term, whichever occurs first.
Note: FHA calculates LTV as a percentage by dividing the loan amount
(prior to the financing of any UFMIP) by the lesser of the purchase price (if
applicable) or the appraised value of the home. For streamline refinances
without appraisals, FHA uses the original appraised value of the property to
calculate the LTV.
Continued on next page
3
Mortgagee Letter 2013-04, Continued
Revision to the
Period for
Assessing
Annual MIP
(continued)
The table below shows the previous and the new duration of annual MIP by
amortization term and LTV ratio at origination.
Term LTV (%) Previous New
≤ 15 yrs ≤ 78 No annual MIP 11 years
≤ 15 yrs > 78 – 90.00 Cancelled at 78% LTV 11 years
≤ 15 yrs > 90.00 Cancelled at 78% LTV Loan term
> 15 yrs ≤ 78 5 years 11 years
> 15 yrs > 78 – 90.00 Cancelled at 78% LTV & 5 yrs 11 years
> 15 yrs > 90.00 Cancelled at 78% LTV & 5 yrs Loan term
Increase to
Annual
Mortgage
Insurance
Premium
Under Public Law 111-229(1)(b), FHA may adjust its mortgage insurance
premium rates, as measured in basis points (bps), by Mortgagee Letter.
The first table shows the previous and the new annual MIP rates by
amortization term, base loan amount and LTV ratio. All MIPs in this table
are effective for case numbers assigned on or after April 1, 2013.
Term > 15 Years
Base Loan Amt. LTV Previous MIP New MIP
≤ $625,500 ≤ 95.00% 120 bps 130 bps
≤ $625,500 > 95.00% 125 bps 135 bps
> $625,500 ≤ 95.00% 145 bps 150 bps
> $625,500 > 95.00% 150 bps 155 bps
Term ≤ 15 Years
≤ $625,500 78.01% – 90.00% 35 bps 45 bps
≤ $625,500 > 90.00% 60 bps 70 bps
> $625,500 78.01% – 90.00% 60 bps 70 bps
> $625,500 > 90.00% 85 bps 95 bps
The second table shows the previous and the new effective annual MIP rates
for loans with an LTV of less than or equal to 78 percent and with terms of up
to 15 years. The new annual MIP for these loans is effective for case
numbers assigned on or after June 3, 2013.
Term ≤ 15 Years
Base Loan Amt. LTV Previous MIP New MIP
Any Amount ≤ 78.00 % 0 bps 45 bps
Continued on next page
4
Mortgagee Letter 2013-04, Continued
Exceptions to
MIP Duration
Changes
The changes to the duration of the annual MIP as specified in this ML are
effective for all Single Family FHA programs for which FHA charges an
annual MIP except:
 Title I
 Home Equity Conversion Mortgages (HECM)
Exceptions to
Announced
MIP Increases.
The increases in the annual MIP specified in this ML apply to all
mortgages insured under FHA’s Single Family Mortgage Insurance
Programs except:
 Streamline refinance transactions of existing FHA loans that were
endorsed on or before May 31, 2009 (see ML 2012-04)
 Title I
 Home Equity Conversion Mortgages (HECM)
 Section 247 (Hawaiian Homelands)
 Section 248 (Indian Reservations)
Information
Collection
Requirements
The information collection requirements contained in this document have
been approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned an
OMB control number of 2502-0583. In accordance with the Paperwork
Reduction Act, HUD may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the collection
displays a currently valid OMB Control Number.
Questions Please address any questions about the topics addressed in this Mortgagee
letter to the FHA Resource Center at 1-800-CALLFHA. Persons with
hearing or speech impairments may reach this number via TTY by calling
the Federal Information Relay Service at 1-800-877-8339. For additional
information on this Mortgagee Letter, please visit www.hud.gov/answers.
Signature
___________________________________________________
Carol J. Galante
Assistant Secretary for Housing – Federal Housing Commissioner

Leave a comment