On Jan. 8, 2015, at a speech in Phoenix, AZ attended by NAR President Chris Polychron, President Obama announced that the Federal Housing Administration (FHA) would reduce FHA annual mortgage insurance premiums (MIP) by 50 basis points. This reduction is a victory for the National Association of REALTORS® whose members have called for lower fees on FHA loans since early 2014. NAR raised concerns about the costly premiums to FHA Commissioner Galante in April 2014, and NAR has lead a coordinated effort with other advocacy groups and members of Congress to achieve this victory. NAR estimates that a 50 basis point reduction in the annual MIP from 1.35 percent to .85 percent would price-in an additional 1.6 million to 2.1 million renters, along with many trade-up buyers, resulting in 90,000 to 140,000 additional annual home purchases.
The premium reduction will be effective for case numbers assigned on or after Jan. 26, 2015. To allow borrowers already in the loan pipeline to take advantage of the lower rates, FHA will temporarily approve cancellation requests for active FHA Case Numbers within 30 days of the effective date of this ML. Full details of the premium changes are published in Mortgagee Letter 2015-01.