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On January 31, 2013 HUD issued Mortgagee Letter 2013-04, announcing a number of revisions concerning the cancellation of the annual Mortgage Insurance Premium (MIP). This change rescinds the automatic cancellation of the annual MIP collection. The change will require that for loans with FHA case numbers assigned on or after June 3, 2013 (FHA case numbers must be dated on or after the application date), FHA will collect the annual MIP for the maximum duration permitted (see chart below).
FHA loans are subject to HPML regulations and due to the extended MI more loans will fail the HPML test than before. Run the HPML test at time of application, when you lock the loan, and anytime the APR changes. See attached instructions for the HPML test.
|Case #’s on or after 6/03/2013 – New Duration of Annual MIP
|≤ 15 years||≤ 78||No annual MIP||11 years|
|≤ 15 years||> 78 – 90.00||Cancelled at 78% LTV||11 years|
|≤ 15 years||> 90.00||Cancelled at 78% LTV||Loan term|
|>15 years||≤ 78||5 years||11 years|
|>15 years||>78 – 90.00||Cancelled at 78% LTV & 5 years||11 years|
|>15 years||>90.00||Cancelled at 78% LTV & 5 years||Loan term|
*For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be .55%, regardless of the base loan amount.
|Case #’s on or after 6/03/2013 – New Annual MIP TERM ≤ 15 years
|Base Loan Amount||LTV||Previous MIP||New MIP|
|Any Amount||≤ 78 %||.00||.45%|
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