On January 9, 2017, the Federal Housing Administration (FHA) announced it would reduce FHA annual mortgage insurance premiums (MIP) by 25 basis points. This reduction is a victory for the National Association of REALTORS® whose members have called for lower fees on FHA loans given the ongoing strength of the Mutual Mortgage Insurance Fund, which exceeded the required reserve ratio for the second year in a row.
The premium reduction will be effective for most new mortgages with a closing/disbursement date on or after January 27, 2017 (excluding Section 247 Loans, Hawaiian Home Lands). Full details of the premium changes are published in Mortgagee Letter 2017-01.
2017 NAR President William E. Brown issued the following statement on behalf of NAR:
“Every time we cut the cost of mortgage insurance it means more borrowers meet the debt-to-income ratio required to purchase a home. It follows that dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA. That puts more money in the fund to protect taxpayers, and it puts more families in homes so they can live out the American dream.”