Karl LeBlanc Mortgage Loan Corner

The FHA recently proposed reducing the UFMIP while increasing the annual premium that is paid monthly. Their stated intention is to bolster their insurance reserve fund. Um, not so fast….

Before even running the numbers, cutting the upfront MIP which is arguably when they need the money the most, wouldn’t seem to make sense. So when in doubt, I always fire up a new spreadsheet. Not surprisingly, my suspicions were confirmed.

If you’d like a copy of the spreadsheet just send a email ....

So which is it? Is the FHA just saying one thing and doing another? Don’t they have accountants that work there? Are they purposefully trying to seal their fate?

Or, for you conspiracy theorists, was this all a well concocted plan to run up the stock prices of the regular PMI companies (check the recent price action)? When you boil it all down, that’s about the only beneficial thing for at least somebody that’s coming out of this…..

My guess is that this is just another well intentioned but very poorly thought out plan by yet another government agency that fails to seek advice from those that are perhaps in the best position to offer it. If this bothers you,

In the meantime, if you have any FHA/fence sitters waiting for things to get better, use the spreadsheet to show them how much more expensive their payment will be or how much less house they’re going to be able to afford once the MI costs go up.

Hesitation May cost you money ...

Karl LeBlanc

 Tuesday, August 10, 2010 1:32:25 PM