Unformatted text preview: ive as the energy performance requirements of the minimum property standards in effect as of September 30,1982. The section further states that the Secretary of Housing and Urban Development may require that any property to be insured under any section of this Act, excluding manufactured housing, shall comply with one of the nationally recognized model building codes, or with any state or local code that is based on these model codes. Standard borrower qualifications – Lenders, prior to the advent of FHA, had no firm guidelines for the qualifying of the borrower, thus allowing the lender to set the rule for each person or applicant. They could have refused the applicant for any reason. Sometimes a loan was refused due to the type of work, marital status, race, or religion of the applicant. MORTGAGE INSURANCE PREMIUM (MIP)
FHA mortgage insurance is a commitment to the lender that the loan will be repaid if the borrower cannot make the required monthly payments. The FHA secures funding for its loan insurance program by imposing a mortgage insurance premium that must be paid by each borrower obtaining an FHA–insured loan. Historically, this income was sufficient to allow this agency to be one of the few self– supporting federal government programs, but FHA losses from foreclosures have risen dramatically, putting an unusual strain on its reserves. As a result, the FHA has taken some drastic steps to reverse the foreclosure trend. The costs for securing an FHA–insured loan have been increased to discourage future defaults. The up–front FHA mortgage insurance premium is 2.25 percent from 1995 and beyond. However, a new annual 0.5 percent premium has been added to the FHA monthly Dynasty School (www.dynastySchool.com) 5-23 REAL ESTATE FINANCE
payments to be paid over specified periods of time that are determined by the LTV ratio, as follows: 10% Down 7 years 11 years 10% – 5% Down 12 years 30 years 5% Down 30 years 0.055 / 30 years 1993–1994 1995 Example:
A $100,00 loan taken out in 1993 i...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10