FHA to cut fees on refinanced loans

Obama's plan would save homeowners about $1,000 a year on fees, in addition to what they save with the refinance. The program is limited to FHA loans issued before June 1, 2009.

By Teresa at MSN Real Estate Mar 6, 2012 2:10PM

Man writing check, calculator, bills (© Dana Hoff/Getty Images)President Barack Obama announced a program today to save homeowners who refinance their FHA mortgages an average of $1,000 a year in addition to whatever they save by refinancing.

 

The plan cuts the upfront mortgage-insurance premium from 1% of the loan amount to 0.1%. The annual fee will be cut from 1.1% to 0.55%. The White House estimated 2 million to 3 million homeowners would be eligible, though it predicted that only several hundred thousand would refinance.

 

To take advantage of the discount, homeowners must be current on their FHA mortgage payments. They do not have to have any equity in their homes; underwater homeowners can also refinance under the plan, which requires no appraisal or income verification. Loans must have been taken out before June 1, 2009, and be done through the streamline program. The Associated Press has a Q&A.

 

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"I'm not one of those people who believe that we just sit by and wait for the housing market to hit bottom," Obama said at a news conference. "There are real things we can do right now that would make a substantial difference in the lives of innocent, responsible homeowners."

The president also highlighted a plan to compensate military members for wrongful foreclosures. That compensation was part of the $25 billion mortgage settlement reached among five big banks, state attorneys general and federal housing officials.

Under that plan, members of the military whose homes were wrongly foreclosed on will receive $116,785 plus any lost equity. In addition, service members who were charged excessive interest rates or were forced to sell their homes in short sales will receive some benefits.

 

The FHA refinancing plan is one of several plans Obama has announced aimed at ameliorating the housing crisis and increasing the number of homeowners eligible for mortgage modification or refinancing. The administration late last year expanded the Home Affordable Refinancing Program, open to borrowers whose loans are backed by Fannie Mae and Freddie Mac. The president has called for homeowners whose loans aren't backed by Fannie and Freddie to get a similar deal, but that requires action from Congress, which is unlikely.

The administration also expanded its Home Affordable Modification program to include rental property, plus increased incentives for principal reduction. However, no principal reduction is available so far on loans backed by Fannie and Freddie.

 

FHA is raising its fees for new mortgages, including refinancing for those who don't qualify for the new reduced-fee program. About one-third of new mortgages today are FHA mortgages, which require only a 3.5% down payment,

 
14Comments
Apr 14, 2012 7:55PM
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Hey OscarGonzales......Did you see the part that said they had to be current???? That means that they have an opportunity to refinance at a lower rate in spite of their loans being upside down. Do you understand what that means?, Now if they will guarantee me that they will appraise my house for the same price that I had it appraised when I purchased it, no problem...I am not under water. But while some richie rich boys made millions, does that make it alright to devalue my house to half of what it was worth, yet they still expect me to pay the same price of the original finance? At least I am not going to sell my house, and I am still going to pay $250,000.00 for a house that they said is only worth half that now. I am current, have struggled to make sure that I stay current, but you just try to buy my house for a penny less than what I paid, and I don't give a rats chance in a cat house what some appraiser say my house is worth. Far as I am concerned it is still worth every cent I have paid and or will pay for it and those appraisers can jump into the lake.
Apr 14, 2012 5:16PM
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where did the magical number of $116,785 for military families come from a bingo caller?  What an amazing windfall since they can purchase with ZERO down! I guess that's one way to increase their horribly low salaries for protecting our asses.
Apr 14, 2012 3:38PM
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I'm glad we have the money to pay for these programs. It must be tough in countries that have alot of debt.
Apr 14, 2012 2:28PM
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when will these clowns stop bailing everyone out, damn people if you over extend it is your problem, not mine, i am tired of odumbo turning this country into a country of beggers, beggers that vote for this administration
Apr 14, 2012 12:46PM
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Where is all this money coming from?
Apr 14, 2012 11:29AM
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When we checked into refinancing they told us that you can not be late on anything for a year and must have a least a  620 credit score. I have gone through an insane divorce and I am still paying seems that I will never reach this score.  Is what Obama trying to do real recent as in the last week or two?  Also when I went to do a loan modification on a Fannie may they told me we did not qualify because you have to be at a 50% debt to ratio.  I don't know about you but, I don't think I know anyone that is that. Is this all a scam?  Sure seems like it is something to suck you into doing a lot of leg work, paper work to just throw you to the curb.  Can anyone give me more information please? Our interest rate is 6% on a 30 year. 
Apr 14, 2012 9:53AM
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A program that could help about 1% of the population.  woo.
Apr 14, 2012 8:25AM
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Your bank will most likely use any excuse to deny your request for refinancing for a simple reason: the bank and its investors will earn less profits because of lower rates translate to lower payments.  All these government programs sound great on TV, especially on re-election year, but they don't help as many homeowners as the programs stated.  Remember that recent 26 billions agreement between banks and government?  Sounded great, didn't it?  That agreement only helps homeowners whose mortgages are NOT Freddie Mac or Fannie Mae loans.  The sad part is 60% of mortgages are FM and FM loans.  Politics as usual!!!
Apr 14, 2012 6:52AM
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No Appraisal and no veification of income = more disasters down the road.  Kicking the can once again?+
Apr 14, 2012 6:41AM
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Why don't they also lower the FHA mortgage insurance premium that you have to pay monthly on a FHA loan. I refinanced and it more than doubled!
Apr 14, 2012 5:07AM
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We refi'd our FHA loan in Sept 2009.  So we missed this by 3 months.  Why the date stipulation?   Thanks for nothing.
Apr 14, 2012 2:21AM
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the fha will give you a loan on your house,but when they appraise it now,the appraisal is very low,we had started a fha loan,they appraised our house for 30,000 dollars and we currently have 50,000 into it,they dont want to give much on the house and then you get charged all their fees!!!!! ripoff,we canceled the loan!!!!!!!!!
Apr 13, 2012 11:35PM
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Oh, I am so GLAD I VOTED FOR PRESIDENT OBAMA...He is really trying to help the "little man". I am also so very GLAD that you put this information on your site!!  I knew making MSN my homepage would pay one day!!!  I also enjoyed the article about the Black gentlemen who worked in the parking booth that is now worth $500K.

Mar 21, 2012 5:12AM
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Unfortunate for me I'm told I cannot refinace with my mortage company, Chase. I hold a convetional mortage with Chase, backed by Freddie Mac and I have never been late on my payment, but because I own a Manufactured Home, I'm told by Chase that they will not refinace our current mortage. The last time I checked , my last credit score was 796. All I want to do is take advantage of the lower payments and help ensure things will be easier for my family if time take a turn for the worse. Does anyone know how they can help me?
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