FHA: Pay less upfront, more later?

HUD wants to raise annual rates

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If Congress goes along, the Obama administration proposes to slash upfront premiums on FHA mortgage insurance to 1 percent, down from 1.75 percent today, but would offset that reduction with a 70 percent increase in annual premiums.

With FHA’s capital reserve ratio falling below the 2 percent minimum set by Congress, the Department of Housing and Urban Development (HUD) last month announced several steps to cut the mortgage insurance program’s losses and raise revenue.