The planned fee reduction, announced by the Obama Administration earlier this month, was set to reduce the annual fee by twenty-five (25) basis points, or one quarter of one (1) percent, from 0.85% to 0.60% for loans less than or equal to Six Hundred Twenty-Five Thousand Dollars ($625,000.00). The planned reduction corresponded to a savings of approximately Five Hundred Dollars ($500.00) in the first year of a Two Hundred Thousand Dollar ($200,000.00) loan.
The FHA mortgage insurance premium rate has varied between 0.55% and 1.35% during the Obama Administration as a reflection of changing market and credit risk.
The FHA mortgage insurance premium rate has varied between 0.55% and 1.35% during the Obama Administration as a reflection of changing market and credit risk.
Explaining the decision to suspend the planned fee reduction, the letter stated that "FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers. As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts".
