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Unconstitutional Patriot
Join Date: Apr 2000
Location: volunteer state
Posts: 5,620
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The House passed a bill on the 10th allowing FHA to increase the annual premium from 0.5% to 1.50%. This is akin to a 1.5% increase in interest rate. Coupled with a reduction in seller contributions, this creates a deflationary force in housing. All else equal, a 1% increase in annual premium is a 20% increase in monthly payment.
Overall, this strengthens capital reserves for FHA. Indirectly, however, a rise in rate may create a greater number of future delinquencies. FHA and Congress hope the scale is tipped in favor of good.
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