On February 14, 2011 HUD issued Mortgagee Letter 2011-10 addressing changes to the Annual Mortgage Insurance Premiums. Included in this Mortgagee Letter was the addition of Annual Mortgage insurance for loans with amortizations <=15 years with LTV’s at or below 90%. Because of this change, certain sections of the “Informed Consumer Choice Disclosure Notice” regarding FHA Mortgage Insurance Premium Information became obsolete. HUD is in the process of updating this model form. In the interim they have instructed that the following changes should be made to the form:
Under the section titled “FHA Mortgage Insurance Premium Information:” The entire second paragraph should be changed to read: “If you have a 15-Year mortgage, you will reach the 78 percent loan-to-value threshold earlier than on longer term mortgages and may not have to pay monthly mortgage insurance premiums for the full five years.”
After asking for guidance from HUD in April regarding this issue, the ConformX copy of the “Informed Consumer Choice Disclosure Notice” (cx41) was modified to add an asterisk to the section in question and this text was included in the footer :“*For case numbers assigned on or after April 18, 2011, 15-year mortgages require a downpayment in excess of 22 percent in order to avoid making monthly mortgage insurance premiums.”
Now that HUD has released guidance on replacing the paragraph text, the ConformX form has been modified to remove the sentence from the footer and edit the second paragraph below “FHA Mortgage Insurance Premium Information:” as instructed in the email sent by HUD yesterday.
The edit to the FHA “Informed Consumer Choice Disclosure Notice” (cx41) will be available tomorrow.
August 17, 2011