Friday, September 23, 2011

FHA loans have the most fees and are the costly loans

What this article left out is that the default rate on these loans are high, so mortgage insurance portion must be increased to cover the costs of these defaults.
"Like the conventional universe, the 4.5% coupon has now moved completely into the 40bp refinancing window," said Scott Buchta, managing director at Sandler O'Neill. "Higher (mortgage insurance) fees and a lack of a HARP-like program may prevent some FHA borrowers from refinancing."
There is strong possibility that most of these FHA borrower will strategically default.

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