House Passes FHA Reform Bill Authorizing Higher Premiums

In a near unanimous vote of 406 to 4 Thursday, the U.S. House of Representatives passed a bill intended to replenish the coffers of the federal agency that insures mortgages against default, the Federal Housing Administration (FHA).

The FHA Reform Act (H.R. 5072) enables the agency to reform its current mortgage insurance premium structure by shifting some of the upfront cost to the annual premium – a move that HUD Secretary Shaun Donovan says will increase FHA’s capital reserves and reduce risks to the FHA insurance fund.

The legislation grants FHA the authority to nearly triple borrowers’ annual premium cap, from the current rate of 0.55 percent, to as high as 1.50 percent. The federal mortgage insurer says this will generate an estimated $300 million a month in additional receipts, while costing the average FHA borrower $42 more in monthly premiums.

The bill also…

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Renee West
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Renee West

Broker Associate at Villa Real Estate
I'm a real estate broker associate in Newport Beach & Corona del Mar, CA, with Villa Real Estate.
Contact me at (714) 914 9060 or rwest@villarealestate.com for all your real estate wants and needs.
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