NAMB Calls on FHA to Change MIP Structure

Feb 20, 2019

NAMB—The Association of Mortgage Professionals has called on Federal Housing Administration (FHA) Commissioner Brian D. Montgomery to consider changing the Mortgage Insurance Premium (MIP) structure in order to make the FHA mortgage more competitive with other loan products.

In a letter to Montgomery, 2019 NAMB President Richard M. Bettencourt Jr. complained that the “credit quality of borrowers using an FHA loan has deteriorated” after Fannie Mae and Freddie Mac introduced their HomeReady and HomePossible products that offered conventional loans at 3 percent down and with mortgage insurance premiums lower than the FHA product.

“We are concerned that FHA is only attracting the lowest credit score and highest debt-to-income borrowers which ultimately puts the Mutual Mortgage Insurance Fund at a greater risk for loss,” Bettencourt wrote.

NAMB’s proposal, Bettencourt continued, was either the implementation of a pilot test of a “tier pricing structure for credit scores similar to conventional loan market where higher credit scores earns a lower annual renewal for the borrower.” Bettencourt added this type of product would enable the FHA to meet its Congressionally mandated two percent cash reserves for the Mutual Mortgage Insurance Fund (MMIF).

After one year, many good FHA borrowers are refinanced into the 97 percent Conventional products so higher MIP can be reduced and eventually eliminated. This structure of FHA leads to less revenue coming to the MMIF from loans that are seasoned and paying into the fund and is a fundamental flaw in the FHA program.

“Tier price for credit scores similar to conventional market-higher credit score earns a lower annual renewal,” Bettencourt stated, noting that many FHA borrowers are refinanced into 97 percent conventional loans after one year, resulting in a lower or eliminated MIP. “This structure of FHA leads to less revenue coming to the MMIF from loans that are seasoned and paying into the fund and is a fundamental flaw in the FHA program.”

About the author

Phil Hall

Link copied

Published

Feb 20, 2019

Military Lending

Repeat Buyers Make Up Nearly 60% Of VA Purchase Business

VA's latest reminder about reusable benefits highlights an opportunity for originators to revisit past clients — and understand the rules around remaining entitlement

Veterans who have already used their VA home loan benefit aren't a niche segment of the VA purchase market. They're the majority.Nearly 60% of VA purchase loans in the latest full fiscal-year data went to previous homebuyers, a figure that takes on new relevance after the De...

Wholesale

UWM Combines Processing And Underwriting In Push For Faster Closings

Underwriting+ combines processing, underwriting, and borrower communication, with UWM reporting an 8.3-day average from submission to clear-to-close during its pilot

United Wholesale Mortgage is expanding the role of its underwriters, putting them in charge of work that traditionally moves among processors, underwriters, and other operations staff.UWM on Wednesday launched Underwriting+, a new program that assigns an underwriter to not o...

Nov

Houston, TX

More from

Regulation and Compliance

Fannie Changes How Rent From A Former Home Counts

Fannie now prohibits leases for departing residences and permits market-analysis tools instead of Form 1007, creating a key documentation difference from Freddie Mac

Regulation and Compliance

Sep 22, 2026

ACES Targets Loans Traditional QC Samples May Miss

New population-testing technology applies lender-defined rules across selected origination and servicing records, then directs flagged files to human reviewers

Tech

Sep 21, 2026

The Risk Your Credit Score Can't See

Place-based market risk can produce dramatically different default outcomes among borrowers with nearly identical credit profiles

Opinion

Sep 17, 2026

Trump Taps FHA Insider Matt Jones To Lead Agency

The former MBA policy executive would oversee FHA underwriting, servicing, and credit-score changes that directly affect lenders and borrowers

Regulation and Compliance

Sep 16, 2026

Regulators Propose Risk-Based Vendor Oversight For Community Lenders

Plan could ease reviews of lower-risk mortgage technology while preserving lender responsibility for vendor failures