3 Comments

1. 

   James E. Veale, CPA, MBT

   December 23, 2011 at 2:39 pm

   As of yet the just announced payroll tax reduction act as passed by the House has not been published. In the Senate version, FHA ongoing MIP would be increased over the next two years to 0.1% above where it is today.

   The Senate version now states: “(I) Subject to subclause (II), with respect to a mortgage, the amount described in this clause is 10 basis points of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under subparagraph (A) and without taking into account delinquent payments or prepayments).
   (II) During the 2-year period beginning on the date of enactment of this subparagraph, the Secretary shall increase the number of basis points of the annual premium payment collected under this subparagraph incrementally, as determined appropriate by the Secretary, until the number of basis points of the annual premium payment collected under this sub-paragraph is equal to the number described in subclause (I).’’

   There remains the strong possibility that we will soon see higher ongoing MIP thus having workers payroll tax reductions ride in part on the backs of our senior homeowners who need HECMs in the future rather than on employers or their workers. Is this fair? What is tough to swallow is the Senate proposed this, not the Republican controlled House.

   Now as to the low balance in the MMI fund, HUD may have to increase MIP and decrease PLFs to meet required legal standards. While none of us will be thrilled by this, nonetheless it may have to be done.

   How will this impact our endorsement level this year? Who knows?

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2. 

   Lester Wood

   December 26, 2011 at 2:21 pm

   I work in an area where the average home value is over $1 million. As a result, my borrowers are grossly overpaying the MIP and therby subsidising the fund.

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     James E. Veale, CPA, MBT

     December 28, 2011 at 9:26 am

     An average is just that; some are higher and some are lower. In the case of Standards, be happy upfront MIP is not like the Medicare tax with no cap.

     Unlike other forms of insurance the insurer provides no way to mitigate its cost except its upfront cost by getting a less risky product. Savers are designed to be contributing the ongoing MIP to the MMI Fund with few if any offsets.

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