The Obama administration has announced two new steps that will be taken to assist FHA borrowers and servicemembers in a
statement released this week.
The administration estimates that 2-3 million FHA borrowers will be eligible. Plans for FHA borrowers include refinancing at a lower cost and a reduction in the insurance premium. The FHA currently charges an up-front mortgage insurance premium of 1 percent of the loan balance and an additional 1.15 percent of the balance per year; the up-front premium will be reduced to .01 percent for loans originated prior to June 1, 2009. Annual fees for refinancing will be reduced to .55 percent.
One provision will have servicemen who were foreclosed upon since 2006 reviewed, and if any are found to have been wrongfully foreclosed upon, they can receive compensation equal to a minimum of lost equity, plus interest. In addition to foreclosure reviews, servicemembers will be reviewed for interest rates to see if any were charged more than 6 percent after a request to lower the rate.
For veterans, $10 million will go into the Veterans Affairs fund to guarantee loans on favorable terms.
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