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October 1 Moratorium of Federal Housing Administration Risk-Based Premiums Initiative in Loan Prospector®September 25, 2008

On October 1, the U.S. Department of Housing and Urban Development (HUD) implemented a one-year moratorium on the Federal Housing Administration's (FHA) Risk-Based Premium structure. As a result of this moratorium, for FHA Case Numbers issued on or after October 1, FHA will no longer base its insurance premiums on a combination of credit bureau score and loan-to-value ratio. Version 2.1 of the FHA TOTAL Mortgage Scorecard will include the new premiums (upfront and annual), as outlined in the September 4 Mortgagee Letter 2008-22.

Changes to FHA Submissions in Loan Prospector

Based on HUD's September 4 Mortgagee Letter 2008-22, effective October 1, the FHA TOTAL Mortgage Scorecard will send:

  • All FHA initial submissions in Loan Prospector with or without FHA Case Numbers to version 2.1.
  • All FHA resubmissions in Loan Prospector with FHA Case Numbers dated on or after October 1, 2008, to version 2.1.

FHA submissions in Loan Prospector are now being sent to the appropriate version of the FHA TOTAL Mortgage Scorecard, however; feedback messages in Loan Prospector have not been updated. As a result, you will continue to receive feedback messages associated with FHA's risk-based pricing initiative for FHA submissions to version 2.1 of the FHA TOTAL Mortgage Scorecard. Please refer to the following table to assist you in determining which version of the FHA TOTAL Mortgage Scorecard you are using and the guidelines you need to follow:

FHA TOTAL Mortgage Scorecard Version Number Case Number Guidelines
Version 1.2

Issued prior to July 14, 2008 Use of previous Mortgage Insurance Premium (MIP) calculation is applicable
Version 2.0 Issued between July 14 through September 30, 2008 Use a combination of feedback messages received and refer to June 11 Mortgagee Letter 2008-16
Version 2.1 Issued on or after October 1, 2008

Refer to September 4 Mortgagee Letter 2008-22 and follow one of these guidelines:

  • Disregard the feedback messages received
  • Review the loan data and messages for accuracy (see list below)

Please note the FHA Case Number must be entered on or before the last submission or FHA will not accept the loan. Remember to submit a FHA Case Number on all resubmissions, or by the final submission, to obtain the correct version response from the FHA TOTAL Mortgage Scorecard.

You do not need to enter any additional data in Loan Prospector based on these changes. The data sent to the FHA TOTAL Mortgage Scorecard is based on the data currently collected in Loan Prospector or on default value(s) and will not require an update to your loan origination system (LOS) at this time.

New Submissions With FHA Case Numbers Dated on or After October 1, 2008

In order to effectively determine the required FHA insurance premiums for FHA submissions in Loan Prospector with FHA Case Numbers dated on or after October 1, 2008, through September 30, 2009, please refer to the September 4 Mortgagee Letter 2008-22 and follow these guidelines:

  • As of October 1, if you receive one of the following feedback messages on the FHA TOTAL Mortgage Scorecard Full Feedback Certificate, and your Case Number issuance date is on or after October 1, please disregard the message and refer to the September 4 Mortgagee Letter 2008-22 to manually determine the appropriate insurance premiums:


    Message Code Feedback Message

    VF

    The UFMIP for this loan is based on the first time borrower NOT having completed HUD approved pre-purchase counseling. The FHA Upfront Mortgage Insurance Premium (UFMIP) Factor cannot exceed 2.00% for first time homebuyers who completed HUD approved pre-purchase housing counseling. 

    VH

    If the refinanced conventional ARM mortgage to FHA mortgage is delinquent, the Upfront Mortgage Insurance Premium (UFMIP) is 2.25%*.  The annual premium is .55% when LTV > 95%; if LTV ratio <= 95%, the annual premium is .50%.

    *Confirm the UFMIP percentage in the September 4 Mortgagee Letter 2008-22, when this message appears on a refinance transaction, if applicable. See the important reminder below regarding continued use of default value for Refinance Type data field.

  • The following feedback messages should be reviewed for accuracy when received on the FHA TOTAL Mortgage Scorecard Full Feedback Certificate:

    Message Code Feedback Message
    VJ

    		The FHA Upfront Mortgage Insurance Premium (UFMIP) Factor is (x.xx)%.

    VK

    		The FHA Annual Premium Factor is (x.xx)%.

    HK Ineligible for FHA w/values sent–See Upfront Premiums Chart.

FHA Submissions and Resubmissions With FHA Case Numbers Issued Between July 14, 2008, and September 30, 2008

Please review HUD's June 11 Mortgagee Letter 2008-16 for initial submissions and resubmissions with a FHA Case Number issued between July 14 and September 30, 2008, and the FHA TOTAL Mortgage Scorecard version 2.0 feedback messages, to help you estimate the total risk-based premium that applies to a FHA loan assessed through Loan Prospector.

Important Reminder: The values for Counsel Type and Refinance Type are defaulted because they are not MISMO-approved and are not available to allow you to enter the actual value. As a result, with these default values, you may have a manual overlay that will have to be done based on the actual values of counsel type and refinance type. For pipeline FHA submissions, refer to the FHA risk-based premium chart in HUD's June 11 Mortgagee Letter 2008-16.

Inquiries on FHA's Risk-Based Pricing Initiative and Related Changes:

© 2010 Freddie Mac

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