According to a press release from the Federal Housing Administration, the agency intends to raise the premiums for up-front mortgage insurance by 0.75 percent in order to help to rebuild its insurance fund, which has been exhausted by the real estate crisis over the last few years.
Also to see increases, will be the annual premiums that will be paid on the loans themselves.
Carol Galante, the acting commissioner for the Federal Housing Administration, released the statement this week, which explained that by taking these actions, it will be possible to bring the agency’s Mutual Mortgage Insurance Fund back to a restored state.
In the release, Galante said that the increases are “modest” and will be only one of a number of different efforts that will be made by the agency in order to be able to meet “the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”
The Federal Housing Administration has said that the up-front premium will be increased from its current 1 percent, to 1.75 percent of the base loan, and that this change will become effective as of April 1, 2012.
On the other hand, the changes that will be made to the annual premiums for mortgage insurance will occur on a staggered basis, with increases in premiums for loans that are less than $625,500 being increased by 0.10 percent beginning on April 1, 2012. The change in the premiums on loans worth more than that will start on June 1, 2012, and will be increased by 0.35 percent.
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