FHA’s annual mortgage insurance premium is increasing effective on case numbers issued Monday, April 18, 2011 and later.  If you have an FHA transaction in process (or are considering an FHA refinance) you need to contact your mortgage professional ASAP to make sure they  have your FHA Case # no later than Friday.

On a sales price of $400,000 with the current minimum down payment of 3.5%, the monthly difference in payment between a case number by Friday and one on Monday is $80.42 per month!

And if your a mortgage originator, hopefully you don’t issue a Good Faith Estimate without your case number or your employer won’t be too happy with you.   Here’s a memo I just received from a wholesale lender:

Please note that increasing the annual (monthly) MIP is not considered a valid changed circumstance under RESPA to increase “Our Origination Charge” in Block 1 / HUD Line 801. Any unapproved changed circumstances will result in restitution to cure being charged to the originator.

This is a perfect example of why mortgage originators are sometimes hesitant to issue a Good Faith Estimate.  How do you cure a fee that is paid for a minimum of 60 months and 78% loan to value based on the original sales price?   And now that mortgage originators cannot pay to cure (correct) a Good Faith Estimate, their employers must…and this, my friends, is part of the reason why employers of mortgage originators (banks, mortgage companies, credit unions, etc.) are having to slightly pad the rates you have access to due to the Fed’s Loan Originator compensation rule.

Here’s HUD’s FAQ’s on RESPA regarding what happens if there are GSE, FHA or Mortgage Insurance program changes:

This could constitute a changed circumstance if the loan originator did not have notice of the GSE, FHA or other mortgage insurance program change prior to the issuance of the GFE. A loan originator may issue a revised GFE reflecting only the increased charges resulting from the ―changed circumstance‖.

There has been plenty of notice about this change…I’m just wondering how many LO’s (or their employers) might be caught by having to issue a Good Faith Estimate during this past week due to having all six pieces of information constituting an application, only to have the borrower “float” or not commit to proceeding…and then deciding to lock or commit Monday or later.

It’s not pretty.