Are your ready for it?

Are you ready for it? HR5872 and HR5981 This is a NEW TAX on anyone who uses FHA loan to purchase.

I don’t care how you word it. You pay more per month. What makes me mad is they are so casual about it. I am not the only one who feels this way .  See what the guys at Think Big Work Small have to say about it.

HR5872 and HR5981 has passed and has already been signed while you weren’t looking. These are the things that affect you and most of you don’t even know about it?

Here is a comment from the Deputy Assistant Secretary Vicki Bott
“Over this past week, the industry responded with support of the new fee structure, but voiced strong concern about having system changes ready in time to meet the original Sept. 7, 2010 deadline,” said US Housing and Urban Development (HUD) deputy assistant secretary Vicki Bott.

My concern is that statement “ industry responded with support for the new fee structure.”  Who in the mortgage industry is agreeing with raising someone’s monthly payment? Having a higher payment means people get less house for the dollar because they can’t qualify for the higher payment. If you are a home buyer using FHA loans would you agree to a higher payment of .75%?  Lenders and Real Estate Professionals are working to help these people BEFORE the increase goes into effect so I am pretty sure they are not the ‘industry” that responded!

HR5872 and HR5981

This gives FHA the authority to change the way FHA loans are insured. ( Mortgage Insurance) Instead of the majority of the Mortgage Insurance being financed into the loan. They are now going to require you the consumer who is getting an FHA loan to pay more per month.

Why are they doing this? CASH Hud can use to fund programs it wants to promote. The problem is they need your money to do it.

Here is one : HUD (FHA) will offer 1 billion in loan subsidies as much as $50,000 per home owner to make their mortgage payment. There are many many more.

FHA is struggling and because they want to be more like conventional lending. FHA is now about 70+% of the home loans.

They cannot promote their Social Side so the answer! YOU PAY MORE!

FHA (Federal Housing Administration) Answer of course, pass the problem along to the new home buyer.

As of October 11, 2010 FHA will be enforcing two new bills HR5872 and HR5881 these bills allow FHA to increase the annual MIP (Mortgage Insurance Premium)while they decrease PMI (Private Mortgage Insurance).

What this means to you as a loan officer or real estate professional is the potential for your clients payments to go up.
What does this mean to the home buyer? In the example provided by above we see that:
Today’s current rate of 0.55% your payment would be $1,192. As of September 7, 2010 to get an FHA Home Loan, you will pay a upfront fee of 1% and a monthly rate anywhere from 0.85% to 0.90% PMI. This brings us to the middle example with a payment of $1,235. Here the upfront PMI is actually less and them you add in the Financed MIP and your payment will increase based on the example.

Steve Hillyer