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FHA to discontinue risk-based pricing Oct. 1

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Bowing to Congress, the Federal Housing Administration will discontinue risk-based premium pricing on its loan guarantee programs for one year beginning Oct. 1.Under a new pricing structure announced this week, borrowers seeking FHA-guaranteed purchase loans will pay an upfront premium of 1.75 percent, regardless of their credit standing. That's 25 basis points more than the 1.5 percent upfront premium in place before risk-based pricing was implemented in July, or an additional $375 on a $150,000 mortgage. Troubled borrowers seeking to refinance under the FHASecure and Hope for Homeowners programs will pay a 3 percent upfront premium, a 75-basis-point increase over the current maximum rate for FHASecure, or an additional $1,125 on a $150,000 home loan. The Department of Housing and Urban Development announced a risk-based pricing structure in May, saying it would save borrowers with good credit money while averting the need for a taxpayer bailout in the face of rising losses to its mor...