As previously announced, HUD has lowered their annual MIP rates (see FHA ML 2017-01 for details).
Unlike most previous changes, these new rates will not apply to loans based on their FHA Case Number Assignment Date. Rather, they will apply to loans where either the mortgage is signed on, or the proceeds of which are disbursed on, January 27, 2017 (whichever event is later). In addition, the base loan amount will no longer be a condition to trigger different MIP rates for loans with closing/disbursement dates that qualify for the new MIP rates.
Pursuant to this, we will be making the following changes:
Data Integrity Checks
Currently, variations of the following “hard stop” errors appear when the information entered for the MIP of the loan does not conform with FHA’s MIP rate requirements (the following example is for a loan where the LTV is 95% or less, the base loan amount is $625,000 or less, and the loan term is over 15 years; the text in brackets will vary dependent upon the terms of the loan):
“The UFMIP rate should be [1.75%] and the annual MIP rate should be [.80%] for loan term [over 15 years] with LTV [95.00% or less], base loan amount [of $625,000 or less], and FHA case number assigned on or after 1/26/15. The UFMIP rate on this loan is currently set to {X}%. The MIP rate on this loan is currently set to {Y}%.”
Because loans with case numbers assigned on or after January 26, 2015 and closed/disbursed before January 27, 2017 will still be subject to the old FHA MIP rate schedule, we will be modifying these warnings to substantially state the following (using the same example above; changes are italicized):
“The UFMIP rate should be [1.75%] and the annual MIP rate should be [.80%] for loan term [over 15 years] with LTV [95.00% or less], base loan amount [of $625,000 or less], and FHA case number assigned on or after 1/26/15, with Closing Date and Disbursement Date before 1/27/2017. The UFMIP rate on this loan is currently set to {X}%. The MIP rate on this loan is currently set to {Y}%.”
We will also be creating new data integrity checks for loans closed/disbursed on January 27, 2017 or later. These warnings will state substantially the following (using the same example above):
“The UFMIP rate should be [1.75%] and the annual MIP rate should be [0.55%] for loan term [over 15 years] with LTV [95.00% or less], and Closing/Disbursement Date on or after 1/27/2017. The UFMIP rate on this loan is currently set to {X}%. The MIP rate on this loan is currently set to {X}%.”
Informed Consumer Choice Disclosure Notice (Cx41)
This document is required by 24 CFR § 203.10 and FHA Single Family Handbook 4000.1, Pt. II, ch. A.1.a.ii.(A).(1), with HUD publishing a model form on their website (available at: https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/model_documents). Mortgagees are required to “revise [their] informed consumer choice disclosure notice periodically to reflect prevailing market conditions.” (Supra § 203.10[d])
Due to these FHA MIP changes, we will be configuring the dollar amount that appears in Row # 8, Column “FHA Financing 203(b) Fixed Rate, to display “$47.94” if:
- “Closing Date” exists and is greater than or equal to 01/27/2017; or
- “Disbursement Date” exists and is greater than or equal to 01/27/2017.
These changes will be in effect on January 13, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
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UPDATE: We have received feedback from several clients and LOS partners that their systems are not quite ready to utilize the new FHA MIP rates. To accommodate this, we will temporarily change the new FHA MIP rate Data Integrity checks to Warnings instead of “full stop” Errors. Please note that this will not apply to Pre-Closing and Closing document packages, which will continue to receive the Errors. This will ensure that no loans are closed with the incorrect MIP rates, but will allow clients to disclose Initial and other packages as usual without getting stopped, even if their systems are not quite ready for the new FHA MIP rates.
The changes from Errors to Warnings will be in effect on Stage servers before 1 PM MST today, and will be live on Production servers tomorrow. If you have any questions or concerns about the changes to the Data Integrity checks, please contact Client Support at 1.800.497.3584.
UPDATE 1/19/2017: Due to the uncertainty surrounding whether the Trump administration will roll back the lower FHA MIP rates or not, we have changed all of the new FHA MIP “full stop” Errors to Warnings, regardless of document package type. See the full announcement here.