Friday Jan 20th came with big news. HUD, in what may be an unprecedented move announced its reversal to its previously announced annual mortgage insurance (MI) reduction which had just been scheduled 11 days prior and set to take effect January 27th. The reduction was to be almost 30% on the most popular program; 30yr mortgage with a 3.5% down payment.
Houston Mortgage Blog
That’s right. No exaggeration here. Starting this past Monday April 9th all FHA loan files will reflect a slew of new changes NONE of which are here to favor the home buyer. Through these changes FHA has tighten the purse strings on financing and some pundits, including yours truly, believe it’s because FHA just cannot handle the current risk of continuing to absorb close to 8x the volume they used to handle prior to the sub-prime crisis. As some in the industry now call it, “FHA IS the new subprime” or at least it used to be. Starting in early 2009 FHA started making major changes to their underwriting requirements and steadily increased its mortgage insurance costs but nothing as financially drastically as these changes.