Urban Institute: Stop charging borrowers for yesterday’s mistakes, FHA

Insurance premium charges aren’t based on today’s reality

The Urban Institute says that the Federal Housing Administration needs to update its approach to insurance premiums.

The federal government’s home mortgage insurance program is finally back in the black, having improved materially over the past year, yet its insurance premiums remain at record-high levels.

Our analysis indicates that that Federal Housing Administration (FHA) can significantly lower its premiums—charging current borrowers more appropriately for their risks—while continuing to build the necessary reserves against future losses.

Today’s high premiums penalize current borrowers for the pricing and performance of the earlier vintages and the deficit in the reverse mortgage program—the two main causes of the fund’s continuing inability to meet its 2 percent congressionally mandated reserve ratio.

http://www.housingwire.com/articles/32521-urban-institute-stop-charging-borrowers-for-yesterdays-mistakes-fha

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s