January 23, 2017
Earlier in January 2017, we reported on changes in policy regarding FHA Mortgage Insurance Premiums. Mortgagee Letter 2017-01 announced revised, lower Mortgage Insurance Premiums, plus the elimination of the distinction in rates based on the base loan amount according to the mortgagee letter.
However, a new mortgagee letter announces that this change has been suspended. “This Mortgagee Letter…communicates that Mortgagee Letter 2017-01, reducing Mortgage Insurance Premiums for loans with Closing/Disbursement date on or after January 27, 2017, has been suspended indefinitely. FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.”
It is unclear at the time of this writing whether the suspended policy will be revised, or eliminated completely, but we will report on any future developments.
Borrowers with FHA loans that have closing/disbursement dates prior to January 27, 2017 were not affected by the changes in policy before or after the suspension, but borrowers who do have loans with closing/disbursement dates on or after January 27 2017 should have a conversation with the lender about whether the current suspension of policy affects their transactions.
Mortgage insurance premiums are required for most FHA mortgages. Borrowers with forward mortgages will have an MIP that lasts either 11 years or the duration of the mortgage depending on the loan-to-value ratio and the term of the loan.
For loan officers who need additional clarification of policy related to these changes, the FHA official site states, “Please address any questions about the topics addressed in this Mortgagee Letter to the FHA Resource Center at (800) 225-5342.”
We get many questions about home loans and related policy, and these new changes are likely to bring several inquiries about the reasons for the suspension of Mortgagee Letter 2017-01.
While we are happy to answer questions, it’s important to point out that this website is in no way affiliated with the government or the FHA, so those seeking clarification about the reasons or causes for the policy change should contact the FHA directly at the number given above.
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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