FHA to announce premium changes soon
The Federal Housing Administration will announce additional premium changes to its mortgage business and streamlined refinance programs in the coming days.
FHA Acting Commissioner Carol Galante said in a speech at the Mortgage Bankers Association servicing conference in Orlando, Fla., Wednesday that the changes are on their way.
As part of the payroll tax extension agreed to last fall, the FHA will raise premiums on its forward mortgages by 10 basis points and by 25 bps for jumbo loans.
Galante said Wednesday the FHA would make additional increases soon to further protect its mutual mortgage insurance fund.
She said lenders have shown some reluctance to give streamlined refinances under the FHA program.
From October 2011, the FHA endorsed $15.3 billion in refinanced government-insured loans, down more than 53% from the $36.2 billion in refinances done in the previous 12 months, according to its December book of business report.
"I wish I could make this announcement today, but we will be making changes to the streamline refinance program structure of premiums soon to achieve greater use of the program," Galante said.
She said changes affect loans written prior to May 2009, when the insurance premium structure was very different from what it is today.
Shaun Donovan, secretary of the Department of Housing and Urban Development, said earlier in February that additional changes would be coming to strengthen the fund. The fund would have needed an unprecedented bailout from the Treasury Department at some point over the coming year, according to White House budget analysis.
But the FHA settled with Bank of America (BAC) over previous Countrywide origination issues for roughly $1 billion. Half of that, along with other settlements to be announced soon will send more than $900 million to sure up the FHA fund.
Meanwhile, the FHA aims to reduce its elevated market share of more than 32%, which it achieved as private insurers struggled under capital problems following the crisis.
In fiscal 2009, the FHA endorsed $360 billion in new mortgages, which declined to $236 billion by 2011 and will drop to $150 billion in fiscal 2013, according to the agency.
"We'll continue working on ways to allow the private sector to pick up market share," Galante said.