Categorized | Finance and Mortgage

New Initiatives May Require More Mortgage Insurance

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More potential homebuyers may be required to purchase private mortgage insurance according to a new initiative by the United States federal government. In an effort to reduce the burden of taxpayers when it comes to mortgage insurance, measures are being considered as to how to reduce the amount of insurance provided by Fannie Mae and Freddie Mac.

Currently, anybody paying less than a twenty percent down payment in the current market has to obtain private mortgage insurance in addition to what is offered through the government-owned Fannie Mae and Freddie Mac. The current measure provides some relief to taxpayers, though many government officials believe the relief is not enough. As such, they have proposed a variety of initiatives that include either requiring more of a down payment to avoid the need for private mortgage insurance, or increasing the fees for receiving a guaranteed mortgage loan through Fannie Mae or Freddie Mac.

There is hope that the new initiatives will be agreed upon and finalized this year, though the changes will not actually take place until 2012.

In addition to discussing new initiatives regarding private mortgage insurance, there have also been talks regarding the improvement of the Home Affordable Refinance Program. The program was initially intended to help millions of homeowners who have an underwater mortgage. However, it has only helped a fraction of that number due to incredibly stringent restrictions.

One potential change that may be seen in the Home Affordable Refinance Program is the elimination of risk fees typically charged by Fannie Mae or Freddie Mac on refinancing through the program.

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About Ella Jourgeson

Ella was recently an intern who checked all the articles for grammatical and spelling errors. She is now an all purpose writer filling in wherever we need help.

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