FHA is tweaking programs to improve revenue and cut losses

There is a strong possibility that the FHA will not require any money transfer from the Treasury, which in any event would not occur until September. Meanwhile, the 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% of the loan balance rather than 1.25% at present.

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


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