FHA Insurance Premium Changes

by Michael Shohoney September 2, 2010 06:10

Yesterday HUD announced (Mortgageee Letter 2010-28) that the premium factors for FHA mortgage insurance will change for loans where the case number is assigned on or before October 4, 2010.  The upfront premium factors are lower while the annual renewal factors are higher.  The new premium factors are:

Upfront Premium Factor--100 Basis Points (i.e. 1.0)

Annual Renewal Factors for loans with a term greater than 15 years--LTV equal to or less than 95%, 85 Basis Points (i.e. 0.85).  LTV greater than 95%, 90 Basis Points (i.e. 0.9)

Annual Renewal Factors for loans with a term equal to or less than 15 years--LTV equal to or less than 90%, No renewal premium.  LTV greater than 90%, 25 Basis Points (i.e. 0.25)

 Additionally, the premium factors for the HECM (Home Equity Conversion Mortgage) program have changed as well.  The new factors for these reverse mortgages are:

Upfront Premium Factor--200 Basis Points (i.e. 2.0)

Annual Renewal Factor--125 Basis Points (i.e. 1.25)

 Since the ZMath Engine, ZMath, eZMath, ZMathReverse and eZMathReverse products all allow the user to enter the insurance factors for all products, a change is not required to your software.  However, changes are required for your inputs (however you may handle that).  Be sure to begin to use the correct premium factors for all loans whose case number assignment occurs on or before October 4, 2010.

 As always, we are here to help.  If you have problems or questions regarding these changes and how it will affect your system(s), please do not hesitate to contact us.