Industry NewsMortgage

FHA premiums face new restructuring

Congress OKs annual premium increase

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Editor's note: This story has been updated and corrected. FHA has pushed back the schedule for implementing changes to premium structuring from Sept. 7 to Oct. 4. Upfront premiums will be reduced to 1 percent, not 1.25 percent as stated in a previous version of this story.Upfront premiums for FHA-guaranteed loans will soon be reduced by more than half, but annual premiums on the government-sponsored mortgage insurance will nearly double now that Congress has given FHA authority to revamp the way premiums are structured.Faced with rising losses on FHA-guaranteed loans, the Department of Housing and Urban Development (HUD) hiked upfront premiums in April, raising them from 1.75 percent of the loan being insured to 2.25 percent.Applications for FHA-guaranteed loans fell nearly 20 percent after the increase went into effect, according to a weekly survey conducted by the Mortgage Bankers Association.But in detailing its plans in February, HUD promised it would roll back upfront premiums ...