Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, in written testimony before the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, addressed a plan to modify insurance premiums for Federal Housing Administration (FHA) loans.
Secretary Donovan noted that HUD already increased the upfront insurance premium for FHA loans to 2.25 percent effective for loans with case numbers assigned on or after April 5, 2010. Please see the January 25, 2010 edition of Mortgage Banking Update for an article on previously announced FHA program changes.
Secretary Donovan stated that HUD plans to eventually reduce the upfront insurance premium to 1.0 percent, and that this reduction would be offset by a planned increase in the annual insurance premium to 0.85 percent for loans with loan-to-value ratios of up to 95 percent and to 0.90 percent for loans with loan-to-value ratios over 95 percent. The Secretary noted that such change will require legislative authority from Congress.