Relief for FHA Customers is on the Way
In the Feb. 21st Georgetowner, the newspaper ran its mortgage with the headline, “It Is Time For Refinance Relief for FHA Mortgage Loan Holders.” My article highlighted the problem Federal Housing Administration-backed mortgage homeowners were experiencing with their desire to refinance their mortgages because of the new, much higher mortgage insurance premiums that all but wiped out their interest rate savings.
You never know who is reading the Georgetowner. On March 6, President Barack Obama announced changes in fees charged to FHA-Insured borrowers. The following is the president’s statement released by the White House:
Reducing Fees for FHA Borrowers Seeking to Refinance: As part of the president’s aggressive effort to reduce barriers and costs for refinancing, the administration is also announcing that the FHA will cut its fees for refinancing loans already insured by the FHA. An estimated 2 to 3 million borrowers could be eligible for this savings, providing the typical FHA borrower with the opportunity to save about a thousand dollars a year through refinancing than they could have under today’s fee structure.
The president announced rule changes that do not require approval by Congress. Considering how productive this latest Congress has been, this is a good thing for homeowners.
Borrowers with FHA-backed mortgages who use the FHA streamline refinancing program currently are being charged an upfront mortgage insurance premium of 1 percent of the loan balance and an additional 1.10 percent for an annualized premium. FHA is lowering the upfront premium to .01 percent for streamlined refinances for loans originated before June 1, 2009, and the annual mortgage insurance premium is being reduced to .55 percent (which is what these mortgage holders are presently paying).
As an enhancement, the government is removing streamlined loans from the tracking mechanism called the “compare ratio” that tracks lender performance. By relaxing the requirement on streamlined loans the folks at FHA are in essence encouraging lenders to do more streamlined loans.
It will take some time for both FHA and the banks to update systems so the new FHA streamline rules can be implemented. Expect the new streamline loan program to be available in a couple of months.
The president’s latest initiative will provide significant savings for millions of current FHA mortgage holders. Many non-FHA mortgage loan customers with loans backed by Fannie Mae and Freddie Mac can presently refinance under the HARP2 program, otherwise know as the Making Homes Affordable (MHA) program.With the latest presidential initiatives, it is proving to be a great year to refinance a home mortgage loan.
Bill Starrels is a mortgage loan officer who lives in Georgetown. He can be reached at 703-625-7355; email Bill.Starrels@gmail.com.