MBS MID-DAY: 3/6/2012


Later today, Obama will announce the suspected grandfathering of MIP for FHA Streamlines as well as an effective erasure of UFMIP (it’s going down to 0.01%).

Concomitant with the MIP reductions, the White House reiterated their previous steps to encourage more Streamline participation by removing Streamlines from the “Compare Ratio” calculation. Excerpts from the Fact Sheet follow:

“The FHA currently charges an up-front mortgage insurance premium of 1% of the borrower’s loan balance and an additional 1.15% of the balance per year. FHA is reducing the up-front premium to .01% for streamlined refinancings of loans originated prior to June 1, 2009 and cutting the annual fee for these refinancings in half, to .55%. Together these reductions could save the typical FHA borrower about a thousand dollars a year.”

“Earlier this year, the Administration announced changes that will finally remove the reticence that many lenders have had to provide refinancing to additional families. The FHA uses a calculation called the “Compare Ratio” to assess lender performance and help determine whether they can continue to do business with the FHA going forward. To date streamlined refinances have been included in this calculation, and because many of the loans refinanced through the program come from higher risk years, lenders have been reluctant to offer the program to customers for fear that it would impact their score and thus their relationship with FHA. The FHA has now removed these loans from that analysis, thus removing this cause for concern for lenders and opening this program up to many more families.”

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