FHA 'Tweaks' Should Not Have Major Impact on Mortgages

Daily Herald (Arlington Heights, IL), November 23, 2012 | Go to article overview

FHA 'Tweaks' Should Not Have Major Impact on Mortgages


WASHINGTON -- You may have seen headlines last week about the Federal Housing Administration needing a taxpayer "bailout" by the Treasury and wondered: Uh oh. Is the FHA heading down the fiscal drain like Fannie Mae and Freddie Mac, which have required billions in federal assistance just to stay in business?

The good news answer for FHA's traditional borrowers -- who are primarily moderate-income, first-time purchasers, and people with limited cash for down payments and less-than-perfect credit histories -- is no.

There is a strong possibility that FHA will not require any money transfer from the Treasury, which in any event would not occur until next September. Meanwhile FHA is making tweaks to its program rules that could affect some loan applicants in the months ahead, and which are designed to improve revenue flows to the agency and cut back on losses.

Among the most immediate changes, new borrowers early next year are likely to be charged slightly higher annual mortgage insurance premiums -- 1.35 percent of the loan balance rather than 1.25 percent at present. On loans above $625,500 in high-cost areas such as California and metropolitan Washington, D.C., the annual premium will go from 1.5 percent to 1.6 percent. This will not be a major problem for most people, but it could cause some buyers to check out FHA's competitors -- private mortgage insurers whose monthly premiums on loans for applicants with high credit scores may be more attractive than FHA's.

To increase revenue streams long term, FHA is also abandoning its practice of allowing borrowers to cancel their annual mortgage insurance premium payments when their loan balance drops to 78 percent of the property value. In effect, this will mean that borrowers obtaining 30-year FHA loans could be paying premiums for decades.

Is this a big deal? Clem Ziroli Jr., president of First Mortgage Corp. in Ontario, Calif., thinks it could encourage some higher credit quality borrowers to "refi out" of their FHA loans and seek better deals in the conventional marketplace. But Paul E. Skeens, president of Colonial Mortgage Group in Waldorf, Md., sees it differently: With fixed 30-year mortgage rates in the mid- to upper-3 percent range and virtually certain to increase -- maybe significantly if the economy improves in the coming years -- "everybody is going to want to keep these loans forever," he predicts. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

FHA 'Tweaks' Should Not Have Major Impact on Mortgages
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.