Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Economic News

Mortgage insurance premiums are on their way up

The plan to increase rates

The Federal Housing Administration (FHA) announced today they will be increasing mortgage insurance premiums borrowers pay up front by 75 basis points to 1.75 percent of the base loan amount, a move delayed from January 2009 after “continuing strains in credit markets led the Congress to delay implementation,” the Administration said in a statement. The delay has caused three years of higher loan limits for some areas based on the Economic Stimulus Act of 2008, the FHA reports.

The FHA will also raise annual insurance premiums by 0.1 percentage points for loans under $625,000 and 0.35 percentage points for anything over that amount. These increases are a means to boost their capital reserves, which in 2009 dropped below the amount required by Congress, with warnings released by the FHA as recently as last fall that losses may exceed reserves.

“After careful analysis of the market and the health of the [Mutual Mortgage Insurance] fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said acting FHA commissioner Carol Galante at the Mortgage Bankers Association conference in Orlando.

According to the U.S. Department of Housing and Urban Development, “The change in FHA loan limits will affect 669 counties across the country, out of a total of 3,234 jurisdictions in which FHA insures home loans. Most loan applications with an FHA case number assigned on or after October 1, 2011, will be subject to the new limits. However, there are some exceptions for FHA-insured to FHA-insured refinances that are noted in HUD’s Mortgagee Letter. In addition, there are exceptions for loans that were issued case numbers on or before 9/30/11 and meet all of the credit approval criteria detailed in Mortgagee Letter 2011 -29.”

Advertisement. Scroll to continue reading.

Some believe the hikes will most strongly impact first time buyers and builders who lean heavily on FHA loans, but the FHA says they are taking the necessary precautions to protect their reserves and keep capital flowing through the investment pipeline which does its share of stabilizing the market, no matter which segments are hurt by the increase.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


Leave a Reply

Your email address will not be published. Required fields are marked *


American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.



Real Estate Technology

(TECH NEWS) It turns out that Internet of Things, like smart bulbs in homes, are not secure and give up your info - here...

Real Estate Marketing

(MARKETING) Your fancy, self-animating website might be making people violently ill, even if it is insanely beautiful. Sorry...

Real Estate Marketing

(MARKETING) Conduit is a CRM that does more than CRM, it analyzes your networking data to help you see how to improve your relationships.

Real Estate Corporate

(REAL ESTATE) Zillow has long been a data powerhouse, but a lawsuit about a $150M listing offers a look into listings claims.

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.