Effective October 1, 2008, for new FHA case number assignments on or after that date, FHA will no longer base its mortgage insurance premiums on a combination of credit bureau score and loan-to-value ratio (Mortgagee Letter 2008-16). The new premiums (upfront and annual) to be implemented for all loans for which a case number is assigned on or after October 1, 2008, are described in Mortgagee Letter 2008-22. A copy of Mortgagee Letter 2008-22 (ML 2008-22) is attached to this memorandum. In summary, ML 2008-22 provides that: 1. The effective date is October 1, 2008, for FHA loans for which case numbers are assigned on or after that date. 2. Upfront Premiums: FHA will charge an upfront premium in an amount equal to the following percentages of the mortgage: 1.75% for purchase money mortgages and full-credit qualifying refinances; 1.50% for streamline refinances; and 3.00% for FHASecure (delinquent mortgagors). 3. Annual Premiums: There are two premium matrixes in ML 2008-22, one for purchase money mortgages, full-credit qualifying refinances, and streamline refinances; and the other one for FHASecure (delinquent mortgagors). 4. FHA will make any subsequent changes to the premium schedule in ML 2008-22 annually, to be effective at the beginning of FHA’s fiscal year, which begins October 1 and ends September 30. 5. Borrowers with credit bureau scores must be risk-classified by FHA’s TOTAL (Technology Open to Approved Lenders) Mortgage Scorecard. 6. Borrowers without credit bureau scores must be manually underwritten and deemed as eligible based on criteria described in Mortgagee Letter 2008-11. 7. For loans involving multiple borrowers, the borrower representing the greatest risk will determine whether the loan is eligible for FHA mortgage insurance. 8. Borrowers with decision credit scores below 500 and with loan-to-value ratios at or above 90 percent are not eligible for FHA-insured mortgage financing. 9. The upfront and annual premiums and the requirements of ML 2008-22 apply to forward mortgages insured under FHA’s MMIF (Mutual Mortgage Insurance Fund), the Section 203(k) rehabilitation mortgage insurance program, and individual condominium units insured under Section 234(c). These premiums do not apply to mortgages insured under Title I of the National Housing Act, reverse mortgages under FHA’s Home Equity Conversion Mortgage (HECM) program, Section 223(e) (declining neighborhoods), Section 238(c) (military impact areas in Georgia and New York), Section 247 (Hawaiian Homelands), and Section 248 (Indian Reservations).
