Moratorium on Risk-Based Premiums for FHA Mortgage Insurance

The FHA had implemented risk based mortgage insurance on July 14, 2008. However, in response to the continued housing and foreclosure crisis, President Bush signed into law the Housing and Economic Recovery Act of 2008.

Now, FHA will charge an upfront premium in an amount equal to the following percentages of the mortgage:

• Purchase Money Mortgage and Full-Credit Qualifying FHA Refinancing = 1.75 Percent
• FHA Streamline Refinance (all types) = 1.50 Percent
• FHASecure (Delinquent Mortgagors) = 3.00 Percent

Annual Premiums: An annual premium, shown in basis points below, to be remitted on a monthly basis, will also be charged based on the initial loan-to-value ratio and length of the mortgage (except for FHASecure delinquent mortgages) according to the following schedule:

• Purchase Money Mortgages, Full-Qualifying Refinances, and Streamline Refinances :

LTV	Annual for Loans >15 Years)	LTV	Annual for Loans < 15 Years
< 95	50	< 90	-None-
> 95	55	> 90	25

• FHASecure (delinquent mortgagors):

  LTV	Annual (all loan terms)
  < 95	50
  > 95	55

Borrowers who refinance their delinquent non-FHA ARM loan into FHASecure and subsequently wish to refinance to another FHA-insured mortgage must use a refinance product that requires full qualifying (e.g., a rate and term refinance). Once the FHA-to-FHA full qualifying refinance is insured, these borrowers will be able to take advantage of FHA's Streamline Refinance program.

Additional information about FHA mortgage insurance considerations under the moratorium can be found in Mortgagee Letter 2008-22 , available in Adobe Acrobat PDF.

FHA refinancing with bad credit is possible even though the subprime market is dead. You may even be able to get a cash out refinance. If you are an existing FHA customer, you could possibly get a FHA Streamline refinance, even if you have bad credit, because there generally isn't any credit underwriting or any need for an appraisal or termite report. A bad credit mortgage refinance is pretty much impossible with a conventional lender. But, now, especially with the moratorium on risk-based premiums, now is the time to refinance, especially if you have bad credit.