October 16, 2012
On March 6, 2012, the FHA and HUD issued Mortgagee Letter 2012-4, which included the following description of a decrease to the annual Mortgage Insurance Premium for “certain Streamline Refinance transactions”:
“For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.”
Additionally, the same document describes further changes to the up front mortgage insurance payments for these same loans:
“For all SF Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the UFMIP will decrease from 1 percent to 0.01 percent of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.”
Since we reported those changes, many FHA borrowers have written asking us, “Will the FHA make any exceptions to the 05/31/09 eligibility date set forth in ML 12-4 for lower MIP and/or UFMIP?”
Since the publication of Mortgagee Letter 2012-4, the FHA has issued an answer to this question, simply stating:
“No. There are no exceptions to the May 31, 2009 eligibility date.”
To clarify, the FHA reports on its official site, “Mortgagee Letter 2012-4 set out a lower Up-Front Mortgage Insurance Premium (MIP) and a lower Annual MIP for the refinancing of FHA-insured mortgages which FHA endorsed on or before May 31, 2009. FHA uses the endorsement date instead of the closing date because the endorsement date is when FHA becomes liable for the payment of a claim on a mortgage it insures.
The May 31, 2009 eligibility date for lower Up-Front and Annual MIP aligns the FHA refinancing program with the Home Affordable Refinance Program, which is the Department of the Treasury
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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