"Right now, the current rule makes borrowers reluctant to refinance into a new FHA loan, since they'd have to keep paying MIP indefinitely. The average life of a borrower keeping a loan is seven years, is what they're saying. But these buyers under FHA, I find, probably aren't buyers that are really moving up. A lot of them keep their homes longer, and [they're] paying a mortgage insurance premium on their house. The risk of FHA is not fair, White said."
"Right now, White said, the rule is especially harsh for first-time homebuyers. Most people who are using FHA are first-time homebuyers. Most people using FHA are in that 100% or under AMI (area median income). So we're saying we want to help these people, and we want to help the affordability crisis and the affordability issues but we're sitting over at FHA penalizing that first-time buyer who can never get rid of their MIP unless the"
NAMB requests that the FHA restore the pre-2013 rule allowing borrowers to stop paying mortgage insurance premiums once their loan-to-value ratio reaches 78%. The 2013 policy was introduced after the housing crisis. The FHA's Mutual Mortgage Insurance Fund held an 11.47% capital ratio at the end of September, more than five times the 2% statutory requirement. NAMB states borrowers who reached 78% LTV have paid MIP beyond actuarial risk and should receive premium relief. NAMB says reversing the rule would improve affordability and reduce refinancing reluctance among primarily first-time, low- and moderate-income FHA borrowers.
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