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Are FHA Borrowers Forced to Pay Prepayment Penalties?(Federal Housing Administration )
Ginnie Mae is forcing Federal Housing Administration borrowers to pay "prepayment penalties," according to the National Association of Realtors, and it wants the agency to change its policy.
NAR claims that over 425,000 borrowers in fiscal year 2003 paid an average of $622 in excess interest fees when they prepaid their FHA loans, due to a refinancing or the purchase of a new home.
When the borrower closes the FHA loan during the middle of the month, Ginnie Mae requires that the borrower pay interest until the end of the month.
"No other loans of any type that I know in the consumer arena are handled in such a manner," according to an NAR letter to Ginnie Mae. "Since Ginnie Mae does not object to having borrowers pay the interest, this allows lenders the leeway to charge this interest to the consumer."
By contract, investors in Ginnie Mae mortgage-backed securities are entitled to receive a full month's interest. And it has been Ginnie Mae's policy, since the agency issued the first MBS 34 year ago, to require the borrower to pay the extra interest.
Ginnie Mae recently completed a review of this longstanding policy and decided against any change.
Ginnie Mae vice president Michael Frenz said in an interview that requiring lenders/servicers to pay the extra interest would increase the cost structure for all FHA loans and negatively effect first-time homebuyers in terms of higher upfront fees and interest rates.
- Realtors Claim Ginnie Mae Charges 'Prepayment Penalties'.
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- Press release article from: PR Newswire December 13, 2001 700+ words
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- Magazine article from: National Mortgage News October 27, 2008 700+ words
...Amilda Dymi NATIONAL HARBOR, MD-Ginnie Mae is essential to the recovery of the market, said Ginnie Mae president Joseph Murin addressing the...times of hardship, Mr. Murin said, Ginnie Mae is a powerful source of stability in...
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