The National Association of Mortgage Brokers (NAMB) encouraged the Federal Housing Authority (FHA) and the Biden administration to end its Life-of-Loan Premium Policy.
Under current policy, the FHA requires borrowers to continue paying their mortgage insurance premiums for the life of their home loan, even when the loan balance reaches 80 percent or below the ’property’s value. Private mortgage insurance on home mortgages created within the government-sponsored enterprises (GSEs) can be canceled after the loan-to-value ratio falls below 80 percent.
“Immediately ending the FHA life-of-loan premium policy is an urgent matter which elected officials in Washington, D.C., should address promptly to bring relief to borrowers across the United States,” NAMB President Valerie Saunders said in the release. “FHA policy should be aligned with similar policies adhered to by the GSEs. With homeowner equity at an all-time, it would be extremely beneficial to future homeowners who utilize FHA financing to have the ability to remove added costs on their monthly payment as their equity grows.
“Government leaders have the tools and information available to bring these practices to a rapid end. We are proud to join fellow industry advocates during this critical time,” Saunders added.
NAMB joined both the Community Home Lenders of America and The Mortgage Bankers Association (MBA) in this effort.
“Just as relief from excessive student debt burdens has been a priority, the Biden administration should make relief from excessive homeownership mortgage cost burdens a priority by ending the FHA life-of-loan premium policy,” Scott Olson, executive director of the Community Home Lenders of America, said.
MBA CEO Bob Broeksmit recently provided a pointed statement concerning the Life-to-Loan Premium Policy.
“The fund’s capital reserve ratio is far above the statutory minimum reserve ratio and is well positioned to withstand any economic slowdown,” he said. “Further action on the MIP, such as eliminating the life-of-loan premium requirement, should be considered to provide payment relief to FHA borrowers.”