March 09, 2023
FHA Lowers Annual Mortgage Insurance Premiums, VA Funding Fee Charge Update and more!
Read more below!
FHA Lowers Annual Mortgage Insurance Premiums
On February 22, 2023, the Federal Housing Administration (FHA), announced (HUD No. 23-041) a 30 basis point reduction to the annual mortgage insurance premiums (annual MIP) charged to homebuyers who obtain an FHA-insured mortgage. The premium will be reduced from 0.85 percent to 0.55 percent for most homebuyers seeking an FHA-insured mortgage. The 30 basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by FHA. Further, the reduction applies to all eligible property types, including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.
The annual mortgage insurance premium reductions are noted in the table below and are effective for mortgages endorsed for insurance by FHA on or after March 20, 2023.
VA Funding Fee Charge Update
On February 14 2023, the VA published Circular 26-23-06 announcing a scheduled change to VA funding fee rates for loans closed on or after April 7, 2023. The funding fee is charged on VA transactions where the borrower does not meet the qualifications for a fee waiver. Statute also provides for a reduced funding fee for borrowers purchasing or constructing a home with a 5- or 10-percent down payment.
Lenders must continue to charge non-exempt Veterans the current funding fee percentage for VA transactions that close prior to April 7, 2023. Exhibit A contains the current funding fee rates for loans that close prior to April 7, 2023. For loans closed on or after April 7, 2023, lenders must charge non-exempt Veterans the new funding fee percentage from the loan fee table in Exhibit B to the Circular.
Exhibit A - Rates for Loans Closing on or After January 1, 2020 and prior to April 7, 2023
Exhibit B - Rates for Loans Closing on or After April 7, 2023 and prior to November 14, 2031
Frequently Asked Question
Question: We have a Home Equity loan the borrower paid off, and we are preparing a Release of Lien. The borrower doesn’t want to pay the filing fee to record the Release. Can we send it to him with a letter explaining that he must record it with the County Clerk to release the lien or are we required to file the Release when a loan is paid off?
Answer: In Texas, lenders are not required to record a release of lien for any loan secured by real property. However, with home equity loans, the lender’s constitutional responsibility is to, within 30 days, cancel and return the promissory note to the owner and give them, in recordable form, a release of lien.
Texas Constitution Article XVI, Section 50(a)(6)(Q) addresses this:
(Q) is made on the condition that:
(vii) within a reasonable time after termination and full payment of the extension of credit, the lender cancel and return the promissory note to the owner of the homestead and give the owner, in recordable form, a release of the lien securing the extension of credit or a copy of an endorsement and assignment of the lien to a lender that is refinancing the extension of credit;
7 Texas Administrative Code §153.24 interprets this constitutional provision by clarifying that the lender is not required to pay for recording and that 30 days is a reasonable time to provide the owner with a release:
Rule §153.24 Release of Lien: Section 50(a)(6)(Q)(vii)
The lender must cancel and return the note to the owner and give the owner a release of lien or a copy of an endorsement and assignment of the lien to another lender refinancing the loan within a reasonable time after termination and full payment of the loan. The lender or holder, at its option, may provide the owner a release of lien or an endorsement and assignment of the lien to another lender refinancing the loan.
(1) The lender will perform these services and provide the documents required in 50(a)(6)(Q)(vii) without charge.
(2) This section does not require the lender to record or pay for the recordation of the release of lien.
(3) Thirty days is a reasonable time for the lender to perform the duties required under this section.
(4) An affidavit of lost or imaged note, or equivalent, may be returned to the owner in lieu of the original note, if the original note has been lost or imaged.