FHA Mortgage Insurance Premium Changes 2012

Up Front and Annual Mortgage Insurance Premium (UFMIP and annual MIP) Increases for all FHA Loan transactions and Decreased for Certain Streamline transactions.

As announced March 6th, 2012 in Mortgagee Letter 12-4 and illustrated in the chart below.

Up Front and Annual Mortgage Insurance Premium (UFMIP and annual MIP) Increases.FHA logo

FHA increased the upfront mortgage insurance premium (UFMIP) by .75 bps for all purchase and refinance transactions with case numbers assigned on or after April 9, 2012. 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.

FHA increased the annual mortgage insurance premium (MIP) by .10 bps for all purchase and refinance transactions with case numbers assigned on or after April 9, 2012.


FHA Mortgage Insurance Premium Changes 2012

Mortgage Insurance Premiums
Loans > 15 years
Case #’s prior to April 8, 2012 UFMIP=100bps
Case #’s on or after April 9, 2012 UFMIP = 175bps
Annual Premium
LTV Case #s Through April 17, 2011 Case #s On/After
April 18, 2011 through April 8, 2012
Case #s On/After
April 9, 2012
<=95.00 percent 85 bps 110 bps 120bps
>95.00 percent 90 bps 115 bps 125bps
Loans <= 15 years and above 78%
Case #’s prior to April 1, 2012 UFMIP=100bps
Case #’s on or after April 1, 2012 UFMIP = 175bps
Annual Premium
LTV Case #s Through April 17, 2011 Case #s On/After April 18, 2011 through
April 8, 2012
Case #s On/After
April 9, 2012
<=90.00 percent None 25 bps 35bps
>90.00 percent 25 bps 50 bps 60bps

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).

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.

Note: Jumbo/High Balance guidelines will be updated at a later date to reflect the June changes.

Term >15 Years
Base Loan Amount LTV Effective Annual MIP
< $625,500 < 95% June 11, 2012 120bps
< $625,500 > 95% June 11, 2012 125bps
Above $625,000 < 95% June 11, 2012 145bps
Above $625,000 > 95% June 11, 2012 150bps
Term <= Years with LTV above 78%
< $625,500 < 95% June 11, 2012 35bps
< $625,500 > 95% June 11, 2012 60bps
Above $625,000 <=90% June 11, 2012 60bps
Above $625,000 >90% June 11, 2012  


Note: Streamline guidelines will be updated at a later date to reflect the June changes.

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.

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.


What’s with All the HUD Emails?

What’s With All the HUD Emails?

Karen Deis, Publisher, www.MortgageCurrentcy.com

I don’t know what’s happening at FHA lately, but they seem to be back-pedaling A LOT lately, and worse yet, modifying some of the mortgagee letters by sending an “email” instead of a “formal notice.”

Here are a couple of things HUD has updated that will affect your origination business right now.

First, FHA has delayed the $1,000 collection, disputed account, identity theft rule (ML 2012-3) from last month until July 1st (which means Case Numbers issued after that July 1st date—not the loan app date). Go through your files and search for the deals that you killed because of this rule—and get them closed. What we expect is a modified version of this rule down the road. So stay tuned.

Another email from HUD clarified that reducing the term of a mortgage on a streamline refi will also meet the net tangible benefit test. The big deal here is that previously it did not apply to streamlines, and now it does.

So, in yet another email, HUD gave step-by-step details on how to cancel case numbers on streamline refis and special instructions for streamlines that require an appraisal. HUD has updated the streamline refi worksheet that you should have started to use on April 6, and an updated FHA TOTAL Scorecard Guide came out on March 15.

Okay, enough about FHA and on to HARP 2.0. Fannie just updated their FAQ on March 15 and updated five of the questions. The biggie here is the addition of question 59, where Fannie says you can add a non-occupant borrower to the refi plus and DU refi plus loans. What are some of the reasons you would want to do this? One reason would be that on a manually underwritten loan, where the payment increases more than 20%, you might need additional income to qualify. Another reason would be to add a child, spouse, brother, or sister who has limited credit to help them establish a mortgage credit history.

The other questions that were updated are: Can you refi if the loan is in a trial modification period?

Does a DU refi plus loan for a property located in a condo project, have to have a condo project review?

How do you use DU to find the standardized address if DU gives you a property mismatch warning?

Which types of transactions are eligible for a DU Refi Plus field work waiver? By knowing which types of loans qualify for waivers—and there are five types—you will not only save your borrowers the appraisal fee, but you’ll be their mortgage hero.

In this issue, you’ll find the very first ever Mortgage Talking Points for consumers: What You Need to Know about HARP: Home Affordable Refinance Program. (By the way, there are a couple of training classes on the http://www.mortgagecurrentcy.com.) This article makes it easy for consumers to understand these different topics: • Determining if your home qualifies • What you will need to apply • What is the “unknown” • What are the benefits. So how can you use it? Facebook post, blog about it, an email and snail mail.

In this issue, you’ll find a couple more Mortgage Talking Points for your real estate agents. The first one is called Manufactured Housing: Quick FHA Financing Facts. There are certain areas of the country where you’ll find manufactured housing, and FHA will finance these types of homes if they meet the 11 conditions. Real estate agents need to know this if they are listing this type of home.

The second is called Mortgage Credit Certifications: A Blast from the Past. Freddie updated how they will use the tax credit to help borrowers qualify for a higher loan amount. So if you are in an area where it’s offered, it’s another way to get the word out on how it works.

And to wrap up what you need to know this month, Freddie has renamed chapter 26 from “Cash and Other Equity” to “Borrower Funds.” The big change here is that cash-out proceeds from a refi cannot be used as cash reserves on Freddie loans.

So, why read Mortgage Currentcy?

Because getting a loan approved these days IS rocket science.

Mastermind 2012 – Las Vegas June 6 through 8

Learn the Critical Money Making Skills You Need To Build a Profitable Mortgage Business!

Join us at The Palms Hotel • Las Vegas • June 6 – 7, 2012

This is THE mortgage event of the year. Mastermind 2012 is bringing the industry’s top speakers all together on the same stage for the first time since 2009. This is the ultimate business boot camp with presentations from Brian Tracy, Harvey Mackay, Greg Frost, Jim McMahan, Steven Marshall, Tim Braheem, Barry Habib, and so many more. Click here to download the detailed agenda of presentations and speakers.

Top of Mind Networks will also host its first ever Users Conference on Friday, June 8th. If you’ve been looking for hands-on Surefire training, an opportunity to meet the Top of Mind team face-to-face, or want to learn more about how Surefire can help grow your business, then you won’t want to miss this special event.

To register for Mastermind 2012 please click here. And you can use the coupon code TOM to receive a discount on your ticket price. We look forward to seeing you in Vegas in June!


What the FTC means by “Commercial Communications” For Mortgage Lenders & Real Estate Agents

The Mortgage Acts & Practices Rules have been in effect since August 19, 2011—so it’s been around for a while buy not many people know about it…YET!

A large part of the rule explains “definitions” and what they mean.  And the biggie here is the Fed’s definition of “commercial communications”—or the various ways real estate agents and loan officer communicate with potential home buyers.

Why would you care?  Because the rule states that if you do place an ad that includes mortgage terms, you must keep a written or electronic version of it for 24 months, in case you are ever audited.

Here’s what is meant by the term “Commercial Communications”:

  • Any written or oral statement
  • Illustrations such as charts and graphs
  • English or any other language
  • Labels
  • Packages
  • Package inserts
  • Radio
  • Television
  • Cable TV
  • Brochures
  • Newspaper
  • Magazines
  • Pamphlets
  • Leaflets
  • Circulars
  • Mailers
  • Book inserts
  • Free standing inserts
  • Letters
  • Catalogue
  • Billboards
  • Posters
  • Public transit cards
  • Point of purchase displays
  • Film
  • Power point slides
  • Audio transmitted over the telephone
  • Telemarketing scripts
  • On hold scripts
  • Upsell scripts
  • Training materials provided to telemarketing firms
  • Infomercials
  • Internet
  • Cellular phones/networks
  • Webpages
  • Email
  • Direct mail
  • In-person sales presentation
  • …anything else considered “commercial communication”

To further clarify record keeping,

  • You must keep copies of all advertising if “materially different”.
    • If the same/similar ad runs in different areas, only one copy required but a list of places where ad placed
    • Description of mortgage products offered to consumers
      • Including terms, conditions and any “unique names” given to the mortgage loan
      • Details of affiliated products, i.e. life/disability insurance

Just a heads up—the two federal agencies assigned the task of enforcing these rules are Consumer Finance Protection Bureau and Federal Trade Commission.

Here’s the info if you’d like to read more about it (or you need help falling asleep) Federal Register, FTC 16 CRF Part 321 or subscribers can Download MortgageTalkingPoints(tm) to share with real estate agents www.MortgageCurrentcy.com



NAR 2011 Home Buyer Survey Results – First Time Home Buyer Statistics

National Association of Realtors® 2011 Home Buyer Survey Results – First-Time Home Buyer Statistics.

The 2011 NAR report called “Profile of Home Buyers and Sellers 2011” has just been released, with a huge amount of information that will help you plan where you should be spending your time and your marketing dollars!  While this info is from 2011, what it does is identify trends.

In 2010, 51% of all home purchases were made by FTHB.  In 2011, it was 37%.  The 2010 numbers are skewed because of the First-Time Home Buyer Credit offering.

Overall, the numbers have significantly changed from 2011.  The entire report provides stats on first-time buyers, repeat buyers, FSBO, and investors, but this article is just about first-time home buyers with a little commentary from me on why the information is critical in your business planning efforts.

  • Over one-third of all homebuyers are buying for the first time.  Read on because you’ll also learn how a huge percentage of FTHB find you and the home they want to buy.  I suggest that you align your marketing with the way FTHB find information – but more on that later.
  • 77% of first-time buyers rented an apartment or a home prior to buying their first home.  Marketing to apartment complexes is still the number one way to market to and get leads from FTHB.
  • 48% of FTHB were married.  The other 52% are categorized by “unmarried couples,” “single men” and “single women.”  If you hold first-time buyer seminars, consider segmenting them into “singles only” or “couples only” events.  Each segment has its own set of home buying and loan approval issues.
  • Some areas are more affordable than others, but 48% of FTHB purchased a home $150,000 or less.  If you have listings in this price range, you may want to ask your sellers if they can offer home buyer incentives, like paying for closing costs.
  • The average distance that a buyer has moved is 12 miles away from where they were previously living.  So, if you are considering marketing to apartment complexes, check to see if there are affordable ($150,000) homes within that 12-mile radius.
  • Based on the information sources FTBH used, you may want to reallocate some of your marketing dollars to online marketing and open houses instead of printed ads.
    • 92% searched for homes on the web
    • 88% searched for real estate agents online
    • 53% used yard signs
    • 40% went to open houses
    • 28% used newspaper ads
    • 17% used homes magazines
    • When it comes to mortgage financing, 95% of the mortgages were fixed-rate type loans. In addition, 26% of FTHB say they got at least a portion of their down payment from a gift.  Since Fannie, Freddie, FHA and VA have their own “gift fund rules,” please call me if your clients tell you they will be getting their down payment as a gift.

So, think about creating a marketing campaign with  your real estate agents that exclusively targets first-time home buyers.  And a little shameless plub here, if you are looking to purchase apartment complex mailing lists, www.ApartmentToolKit.com Karen Deis 800-535-3343

Free H.A.R.P 2.0 Class – All Hype? Or a Big Help?

So, I asked a bunch of Loan Officers to post their HARP questions on www.facebook.com/mortgagecurrencty and there were so many, that I ended up doing a free class with a HARP expert–who has first-hand street creds because he also originates these types of loans.  Here’s a few of the things that you’ll learn”

  • Overview of HARP
  • The differences between “current” and “new” servicers
  • Fannie and Freddie differences
  • Qualifying Quirks
  • Private Mortgage Insurance
  • Manual vs. Automated Underwriting
  • Non-owner occupied rules
  • Subordinated Financing rules
  • Solicitation Rules
  • http://www.mortgagecurrentcy.com/videoupdates.php

Did I mention that it’s free?

Karen Deis

Do The Mortgage Rule Updates Want to Make your Brain Explode? More HARP

If This Just Doesn’t Want to Make Your Brain Explode…

Can you guess how many rule updates affected JUST the
origination side of the business from January 1st to December 31st,

Just guess!

Ok, I’ll tell you—it’s 259, or an average of 21 rule updates per month.  To get it down to the ridiculous, that’s 1
rule update for EVERY working day of the year.

Now, about the elephant in the room—HARP, or Home Affordable
Refinance Program. Fannie held a conference call and what’s clear to us is that
there are MORE questions than answers these days.

In fact, Fannie published an updated
FAQ for HARP and their DU Refi & DU Refi Plus loans.  Here are the new questions and answers
published as of December 20, 2011.  We
chose only the ones that affect loan officers and the processing of the loan.

Q. 23. (New) Does standard Selling
policy related to the 4506-T apply to Refi Plus and DU Refi Plus

Standard Selling Guide policy related to the 4506-T applies to Refi Plus loans if the
payment is increasing more than 20% and to all DU Refi Plus loans since
borrower income must be verified for qualification purposes. It is not
applicable to Refi Plus loans when the payment is not increasing more than 20%
since verification of borrower income is not required.

Q 26. (Updated)  Why was the “reasonable ability to repay”
representation and warranty removed?

The “Reasonable Ability
to Repay” terminology has been removed from the DU Refi Plus and Refi Plus
Underwriting Requirements sections of the Guide because these sections already
describe the specific underwriting requirements that are applicable to each

Under Refi Plus (manual underwriting) eligibility is based primarily on the payment history of the
existing mortgage and the borrower benefit provisions. Additionally, effective
with applications dated December 1, 2011, if a borrower’s payment increases
more than 20% then the borrower will have to be re-qualified. Under DU Refi
Plus, DU applies the standards for ensuring the borrower has a reasonable
ability to repay. For these reasons the lender is not responsible for meeting
additional “reasonable ability to repay” standards.

Q 59. (Updated) Even if no new
project review is required for a Refi Plus (manual underwriting) loan secured
by a condominium or cooperative, must the lender still confirm adequate
insurance coverage for the project or unit?

No confirmation of
insurance coverage is required for Refi Plus (manual underwriting). The
lender’s original project review would have included confirmation of the
required insurance coverage, and there are existing processes required by the
Servicing Guide to monitor and ensure such insurance coverage remains in force

Q 83. (Updated) If a loan is
originally submitted to DU, can it be converted to manual Refi Plus?

Yes. Loan casefiles
originally submitted to DU may be converted to a Refi Plus (manual) transaction
for any reason and without regard to the DU recommendation. In all cases, if
the lender is converting a loan from a DU Refi Plus to a Refi Plus (manual
underwriting) transaction, the lender must be the current servicer of the loan
and the loan must comply with all Refi Plus (manual underwriting) requirements.

Q 84. (Updated) For a loan to
be eligible for DU Refi Plus, the borrower(s) and subject property address on
the loan casefile must match an existing eligible Fannie Mae loan. Are there
any existing Fannie Mae loans that are not eligible to be refinanced using DU
Refi Plus?

Certain existing loans will not be identified by DU as eligible for DU Refi Plus. They
include, but are not limited to: loans purchased by Fannie Mae on or after June
1, 2009; loans currently subject to any outstanding repurchase request (see Q82
for related information); some loans that were subject to some form of
secondary-market credit enhancement (see Q56); and government mortgages.

Although these loans may not be eligible to be refinanced using DU Refi Plus, they may be eligible
for other Fannie Mae refinance options.

The last time we checked, there were about 30 questions, and now we are up to 100 even. The 5 listed  are the new and updated ones that affect loan
originators and processors.    We expect a bunch more as the program gets rolled out to everyone in March, 2012.  We will keep you updated on the new questions
as they are updated.

Home Affordable Refinance
FAQ’s 12-20-11


More rule updates can be
found www.MortgageCurrentcy.com where you can give it a test drive for just $1

Bill Would Open VA Loans to More Surviving Military Spouses

A House bill passed this week would increase access to the VA home loan program for surviving spouses of permanently disabled veterans.

Dubbed the Disabled Veterans’ Surviving Spouses Home Loans Act, the proposed legislation would eliminate the requirement that only spouses of veterans whose death is attributed to a service-connected disability may qualify for a VA loan.

Instead, the bill would provide loan eligibility to spouses of permanently disabled veterans whose deaths are not necessarily attributed to their service-related disability. It passed by a 418-6 vote as part of the Veterans Opportunity to Work Act.

“As we approach Veterans Day, we should ask ourselves if this Congress doing all that can be done for our veterans,” U.S. Rep. Virginia Foxx, R-N.C., the bill’s sponsor, said before the House vote. “This bill maintains our promise not only to the men and women that have served in the Armed Forces, but to their families as well.”

The change would provide loan eligibility to thousands of military spouses.

A series of veterans organizations came out in favor of the bill, including Veterans of Foreign Wars, the American Legion and Disabled American Veterans.

More than 18 million Americans have used the VA loan program to become homeowners since 1944. The program has become increasingly important in recent years as lending requirements have tightened.

VA loan volume has increased 135 percent since 2007. Last year, the agency guaranteed 314,011 loans last year, including about 1,000 to surviving spouses.