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Update on Mortgage Insurance Cut: FHA to Allow Case Number Cancellation

Friday, January 9, 2015

Details and clarifications are now available for lenders and borrowers regarding President Obama's Thursday announcement of reduced FHA mortgage insurance premiums (MIP).  In addition to fine-turning details about eligibility, a Mortgagee Letter released by the Department of Housing and Urban Development this morning has some good news for borrowers currently in the process of getting a loan.

According to the executive order announced yesterday FHA will almost immediately cut .5 percent from the annual premium for the FHA backed loans with terms greater than 15yrs.  For most FHA loans this will reduce the annual premium from 1.35 percent of the loan balance to .85 percent.  Loans with balances above the loan limits in effect in most areas and with current MIP of 1.50 to 1.55 percent will see new premiums of 1.00 or 1.05 percent respectively. The upfront premium for all loans will remain unchanged at 1.75 percent.

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