Announced FHA Policy Changes:
1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
o The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
o If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
o The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
2. Update the combination of FICO scores and down payments for new borrowers.
o New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
o This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
o This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
HISTORY OF INTEREST RATES
HOW RATES HAVE TRACKED SINCE 1974
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