HUD proposes raising mortgage interest premiums

Tue, Feb 15, 2011


The Department of Housing and Urban Development released its 2012 budget proposal yesterday.

HUD projects further declines in Federal Housing Administration originations, which fell 9-percent in 2010, and the agency proposes raising mortgage insurance premiums on 15 and 30-year FHA-backed loans by .25-percent to make up for the shortfall.

The premium change would affect new loans insured by FHA beginning on Apr. 18, 2011.

HUD estimates the change will contribute an additional $3 billion to the Mutual Mortgage Insurance fund, which currently has reserves of approximately $3.6 billion.

New FHA borrowers are projected to pay an average of $30 more per month.

Read the HUD press release here.

Further analysis can be found here.


1 Comments For This Post

  1. Rick Van Wieren Says:

    This is such silly logic. Originations are down, so raise prices to make up the difference. This is a ‘tax and spend’ mindset. If originations are down, has anyone asked why it is so much harder than it used to be to get an FHA loan in the first place?
    We need to send all the bureacrats in Washington home for 6 months and let the real estate market heal. With each new wave of fees and regulatiosn, they make it harder and harder to get a house sold!