FHA Mortgage Insurance "Cheat Sheet" for Originators, Processors and Underwriters

Written By: Stacey Sprain, Op-Ed Writer

HUD finally “threw us a bone” on Wednesday when they posted their Moratorium on Risk Based Premiums at the FHA website. According to the Moratorium, the new premiums will be required for cases assigned on and after October 1st, 2008 through September 20th of 2009. (I’ll be honest, I think these premiums are quite fair. I expected much higher across the board).

The new premium structure looks like this: Click Here>>

Effective for cases assigned during the period July 14th, 2008 through September 30th 2008, the following risk based premium structure must be applied as was announced in Mortgagee Letter 2008-16.

To see the Upfront and Annual Mortgage Insurance Premium: Click Here>>

And finally, for loans closed on and after January 1st of 2001 through cases assigned July 13th 2008, the following mortgage insurance premium chart applies: Click Here>>

The following rules apply to the cancellation of FHA mortgage insurance:

On loans closed on or after January 1, 2001, FHA's annual mortgage insurance premium will automatically be canceled-once the unpaid principal balance, excluding the upfront premium, reaches 78% of the lower of the initial sales price or appraised value. The 78% is based on the initial amortization schedule, and does not take account of extra payments. This cancellation rule applies only to FHA's mainstream insurance program.

Borrowers who have made additional payments to principal must take the initiative, through their lender, to have the insurance terminated using the 78% rule. The insurance must be in force for at least 5 years.

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

About The Author

Stacey Sprain - As an op-ed writer, Ms. Stacey Sprain is currently a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. 


Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.