Is the FHA really in peril? The American Enterprise Institute (AEI), a conservative think tank, apparently thinks so.
“No serious observer of the Federal Housing Administration (FHA) believes its financial future is bright,” writes Peter J. Wallison and Edward J. Pinto in a recent market outlook titled, “Bet the house: why the FHA is going (for) broke.” Read the rest of this entry »
Our blog post back on June 11, 2010 was titled “FHA Loans Could Be Getting A lot More Expensive.” This past week Congress has approved changes that allow the FHA to replenish their depleted reserves, thus increasing costs for borrowers.
The FHA will simultaneously lower their upfront mortgage premium from 2.25% to 1%, and increase their annual mortgage premium from .55% to up to 1.55%. According to the letter issued this week by Federal Housing Commissioner David Stevens, the FHA will not be fully increasing the annual premium to 1.55% at this time. Beginning September 7, 2010, the FHA will first increase their annual premium to .85% for borrowers with 95% LTV or lower, and .90% for borrowers above 95% LTV.
The Federal Housing Administration (FHA) has found themselves launched to the forefront of the housing industry. With a relatively-new commanding presence in the housing market, the FHA has simultaneously encountered struggles and success. To balance the two, the FHA announced “a set of policy changes” designed to both strengthen their shaky capital reserves, and to enable the administration to aid in housing’s recovery.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner [David] Stevens.
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