After falling for five straight months, the ""Federal Housing Administration's"":http://www.fha.gov (FHA) delinquency rate held steady in July at 8.3 percent. The mortgage insurer's past
[IMAGE] due loans have dropped more than a full percentage point since the beginning of 2010, when its delinquency rate stood at 9.4 percent.
According to FHA's latest ""operations report"":http://www.hud.gov/offices/hsg/comp/rpts/ooe/olcurr.pdf, as of July 31st, 540,512 of the mortgages it guarantees had spent at least 90 days in a delinquent status. The agency says so far this fiscal year, it has paid on 239,747 claims -- most for loss mitigation retention actions; 77,815 claims have been for property conveyance to FHA.
In early August, Congress voted to allow FHA to raise borrowers' annual mortgage insurance premiums to help the agency replenish its capital reserves, which have been severely depleted by an elevated number of default claims.
For mortgages with a loan-to-value ratio (LTV) of 95 percent or less, Congress authorized an annual premium[COLUMN_BREAK]
ceiling of 1.5 percent, up from 0.5 percent, of the remaining principal balance. For mortgages with an LTV above 95 percent, the amount of the allowable annual premium was raised from 0.55 percent to 1.55 percent.
Although the law authorized HUD to raise FHA's premiums up to these amounts, ""HUD is not doing so at this time,"" the agency said in a ""mortgagee letter"":http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-28ml.pdf issued Wednesday.
""HUD has decided to raise the annual premium and correspondingly lower the upfront premium, except for Home Equity Conversion Mortgages (HECM), so that FHA is in a better position to address the increased demands of the marketplace and return the Mutual Mortgage Insurance (MMI) fund to congressionally mandated levels without disruption to the housing market,"" the announcement stated.
On loans of more than 15 years, annual insurance premiums for LTVs above 95 percent will increase to 0.90 percent of the balance. For LTVs at or below 95 percent, the annual premium will go up to 0.85 percent.
At the same time, FHA is reducing the upfront premium charged on the amount borrowed by 100 basis points from the current 2.25 percent.
For amortization terms of 15 years or less, the annual premium is unchanged at 0.25 percent.
The new premium payment structure goes into effect October 4, 2010.
At the end of July, FHA had 6,499,005 mortgages in force with an unpaid balance of $873.5 billion.