Senor

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSINGFEDERAL HOUSING COMMISSIONER

Date: March 6, 2012 To: All Approved Mortgagees

Mortgagee Letter 12-4
Subject

Single Family Mortgage Insurance: Annual and Up-Front Mortgage Insurance Premium – Changes This Mortgagee Letter (ML) announces changes to the FHA Single Family Annual MortgageInsurance Premium (Annual MIP) and UpFront Mortgage Insurance Premium (UFMIP). Changes are applicable to all Single Family (SF) Forward Mortgage programs except those noted in the section below titled, “Exceptions to Announced Premium Changes”. Current Annual MIP and UFMIP remain unchanged for those excepted programs and products at this time. These changes are effective for FHA case numbersassigned on or after April 9, 2012, unless otherwise specified below. Mortgagees must continue to comply with the requirements of ML 2011-10 concerning requests for, and cancellation of, FHA case numbers. Specifically, mortgagees must: request case numbers only when they have an active loan application for the subject borrower and property; and certify at the time of requesting a case number that theyhave an active loan application for the subject borrower and property; and provide the subject borrower’s name and social security number for all new construction (proposed construction and existing construction less than one year old).
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Purpose

Effective Date

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Mortgagee Letter 12-4, Continued
Affected Topics

Below is a list of the blocks in the subjecthandbook that are affected. HUD 4155.2 Lender’s Guide to Single Family Mortgage Insurance Process 7.3.e, Reference Chart: UFMIP and Annual MIP for Mortgages with Terms More Than 15 Years 7.3.f, Annual Premiums for Mortgages with Terms More Than 15 Years 7.3.g, Reference Chart: UFMIP and Annual Premiums for Mortgages with Terms Less Than 15 Years

Increase to Annual Mortgage Insurance Premium

OnDecember 23, 2011, the President signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (Public Law 112-78), which requires FHA to increase the Annual MIP it collects by 10 basis points (bps). This change is effective for case numbers assigned on or after April 9, 2012. The table below shows the new effective annual premium rates by amortization term, base loan amount and LTVratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date. Term > 15 Years Base Loan Amount LTV Effective Annual MIP Any Amount ≤ 95.00% April 9, 2012 120 bps Any Amount > 95.00% April 9, 2012 125 bps Term ≤ 15 Years with LTV above 78% Any Amount ≤ 90.00% April 9, 2012 35 bps Any Amount > 90.00% April 9, 2012 60 bps Note: SF forward mortgages with amortizationterms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).
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Mortgagee Letter 12-4, Continued
Increase to Annual Mortgage Insurance Premium on Mortgages with a High Outstanding Base Loan Amount

FHA is also exercising its pre-existing statutory authority to add an additional25 bps to mortgages with base loan amounts exceeding $625,500. This change is effective for case numbers assigned on or after June 11, 2012. The table below shows the new effective annual premium rates by amortization term, base loan amount and LTV ratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date. Term > 15 Years Base Loan Amount LTV EffectiveAnnual MIP ≤ $625,500 ≤ 95.00% June 11, 2012 120 bps ≤ $625,500 > 95.00% June 11, 2012 125 bps Above $625,500 ≤ 95.00% June 11, 2012 145 bps Above $625,500 > 95.00% June 11, 2012 150 bps Term ≤ 15 Years with LTV above 78% ≤ $625,500 ≤ 90.00% June 11, 2012 35 bps ≤ $625,500 > 90.00% June 11, 2012 60 bps Above $625,500 ≤ 90.00% June 11, 2012 60 bps Above $625,500 > 90.00% June 11, 2012 85 bps Note: SF...