HUD’s QM MIP Factor

We’ve received several calls from confused clients regarding the mortgage insurance premium (MIP) factor and how it relates to the new HUD Qualified Mortgage (QM) status.

Basically, all HUD (FHA) loans are QMs.  They will receive a “conclusive” safe harbor if the rate spread between the annual percentage rate (APR) and average prime offer rate (APOR) is less than or equal to the annual MIP premium plus 1.15%.  On the other hand, they will receive a “presumption of compliance” if the APR/APOR rate spread is greater than the annual MIP premium plus 1.15%.

You will find the current annual MIP rates within the 2nd and 3rd tables of HUD’s Mortgage Letter 2013-04.  Please note the rates are noted as “basis points” so, for example, 135 bps = 1.35%.

Published
2014/01/17
Jerod Moyer
Jerod Moyer

Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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