The mortgage insurance premium cut starts today and HUD has issued a warning to lenders.
The 50 basis point reduction for Federal Housing Administration (FHA) mortgage insurance premiums begins today, and the agency expects the high volume of applications will slow down processing times.
In an announcement made by the Department of Housing and Urban Development (HUD), the agency also issued frequently asked questions regarding the change and stated if a new case is replacing and old one, the old case cancellation must be completed before the FHA Connection (FHAC) will allow a new case number assignment.
FHA said it will monitor processing times and, if necessary, provide updates through the FHAC Message Board, which lenders can access after FHAC log in. HUD stated FHAC peak times are between 11 a.m. and 3 p.m. EST.
HUD’s Mortgagee Letter 2015-01 now includes additional information about interest rates for mortgages for with less than 15-year terms. The reissued letter clarifies that the MIP reductions do not apply to mortgages with terms less than 15 years. All the other policies outlined in the initial letter remained unchanged.
Earlier this month, U.S. President Barack Obama addressed new housing initiatives, including lowering FHA rates, winding down Fannie and Freddie and continuing to crack down on shoddy lending practices.
