FHA to reduce MIP starting January the 26th by Camino Real Mortgage Bankers

Posted on January 16, 2015 at 10:45 AM

The Federal Housing Administration (FHA) released a mortgage letter last Friday announcing the reduction of 0.5% to the existing MIP fee, starting with case numbers issued on the 26 of January, the letter also indicated that borrowers who were already in the process of applying for a loan, would have the opportunity to cancel their existing case number and re-apply for a new one, starting on the 26th, in order to take advantage of the fee reduction.

The announcement came after President Obama directed, via executive action, the FHA to reduce the mortgage insurance premium by 0.5%, from 1.35% to 0.85% on January the 7th.

Although many see this move as an attempt to gain popularity, others see this as a move that will positively impact the first time homebuyer sector that had been paying one of the highest mortgage insurance premiums in the market, as well as members of the building industry.

While the news isnt good for private mortgage insurers who have been happily raking in market share gains at the expense of the government agency, the homebuilders are a different story, a Seeking Alpha article said.

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