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FHA Increases UFMIP and Down Payments

So I’m sitting here watching CNBC, and what do I hear?

FHA changes UFMIP to 2.25% and Down Payments are being increased!

If you recall, I have been writing about my outlook on FHA changes for a while now, and folks, I wasn’t that far off.

The Federal Housing Administration has been in some financial trouble due to other types of financing being unattractive, and because of all the rising defaults due to the job market, FHA’s tightening up.

Now this is going to take some time to get passed down through the funnel to the investors (banks/lenders), so I am not sure of when the changes will be effective, but take this a forewarning, and also, A HEAD START TO PREPARE. When it does go into effect, I will be the first to let you know.

In this morning’s mortgage bond market, we are up 16 bps and we’re hedged between both levels of resistance, as the FNMA 30 Year 4.5% coupon is currently being sold at $100.78.

Here are the results from today’s reports:

  1. Producer Price Index (PPI)- 0.2%
  2. Core Producer Price Index– 0.0%
  3. ICSC-Goldman Store Sales– 2.0%
  4. Housing Starts– 557K

Have a great day, and I’ll be back with any significant changes!