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It's Official...FHA Up Front Mortgage Insurance Increased

In a HUD Mortgage Letter I received today, David H. Stevens, Assistant Secretary for Housing-Federal Housing Commissioner issued the change for FHA Up Front Mortgage Insurance. So, effective for FHA loans for which the case number is assigned on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. Previously it was 1.75%. This policy change will increase premiums for purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit qualifying streamlined refinance transactions.

The only FHA programs that are exempt from this change are as follows:

- Title I
- Home Equity Conversion Mortgages (HECMs)
- Hope for Homeowners (H4H)
- Section 247 (Hawaiian Homelands)
- Section 248 (Indian Reservations),
- Section 223(e) (declining neighborhoods)
- Section 238(c) (Military Impact areas in Georgia and New York)


Just when you think the rule changing is part of the past, it finds it's way back to the present.

Rates Fall 6 Straight Weeks, and Stay Under 5% for 2 Weeks Straight

Rates Remain Under 5% for 2nd Week In a Row (see last paragraph for mention of possible extension of Tax Credit again!)

"The possibility of securing a mortgage rate below 5% has greatly improved in recent weeks, in a positive sign for would-be home buyers", said CNNMoney.com. All facts show, from Freddie Mac's report to Bankrate.com, rates have dropped.

After 6 straight weeks of rates dropping, we now wonder if forecasts for higher rates may be off on their expected timing. Maybe rates start their climb in late 2010 and we see the higher 6% rates in 2011...Warren Buffet said yesterday that he expected recovery in the housing market to be full on in 2010, so who do we believe?

Freddie Mac's (FRE, Fortune 500) weekly report said the 30-year rate slipped to 4.87% for the week ended Thursday, the lowest since May. According to the mortgage backer, last week's rates stood at 4.94%. On the other hand, Mortgage tracker Bankrate.com said the average 30-year fixed loan slipped to 5.22% from 5.25% the previous week. The 15-year fixed rate also fell, Bankrate said, to 4.6% from 4.64% the week before. Keep in mind, Bankrate.com always posts higher rates, I believe, because their main audience is Loan Officers and lenders of their competition because they do such a good job of posting cause in the daily fluctuation of mortgage rates as it pertains to stock and bond works daily. So, Freddie is more accurate as a whole.

Why are mortgage rates still dipping below 5%? Bankrate.com said that it's because of the poor employment reports. Poor stability in the growth, or at least having a lesser amount of unemployment from month to month, is a sign that economic rebound is not coming along as fast as we hoped. Therefore, investors in the stock and bond world are nervous, and when they are nervous, they pull money from risky stock and put it into bonds. When bonds are seeing more attention from investors than stock, in ratio terms, it's good for our mortgage rates. Also reported to cause this change in rates, CNNMoney said, "Now the central bank has less than $15 billion left to spend on its buyback program, which led some investors to worry that yields would soar again. So far, that's not the case."
On Wednesday, reports said Democratic congressional leaders were working to extend a $8,000 tax credit for first-time home buyers past the Nov. 30 expiration date and could even make it available to current homeowners who buy a new house...CNNMoney reported.

Foreclosure Ban...Review for Obama's Modify Mortgage First

The Federal Housing Finance Agency (FHFA) is authorizing the extension of Home Affordable Refinance Program (HARP) until June 30, 2011. Also included in the HARP is the modification program. This is good news for those who need to refinance their homes but still have little equity in their home. TheTruthAboutMortgage.com reports that 24% of mortgages in America are "underwater". Meaning, there is a need for modification or refinance to lower payments and get payments to a managable amount.
The Obama Administration announced the foreclosure ban. Possible foreclosures under this plan would have to be reviewed for to see if they would qualify for the Home Affordable Modification Program first. TheTruthAboutMortgage said, "A document detailing the proposal obtained by Bloomberg said it 'prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.'”
This plan is not approved, but many think it will not be shot down.