This notice announces FHA's planned implementation of risk-based premiums, which are designed for mortgage lenders to offer borrowers an FHA-insured product that provides a range of mortgage insurance premium pricing, based on the risk the insurance contract represents.

The National Housing Act establishes mortgage insurance premiums for most FHA single family programs. Such upfront and annual insurance premiums are set at levels not to exceed 2.25 percent and 0.50 percent (0.55 percent for mortgages involving an original principal obligation that is greater than 95 percent of the appraised value of the property), respectively, with a discount available on the upfront premiums for mortgagors who are first-time homebuyers and who successfully complete the approved pre-purchase homeownership counseling.

By offering a range of premiums based on risk, FHA will be able to offer options to mortgagees serving borrowers who were previously underserved, or not served, by the conventional marketplace.
Alternatively, FHA will also be able to offer options to mortgagees serving those borrowers wishing to lower their premiums by, for example, increasing their downpayment or by improving their credit scores. A range of premiums based on risk will also ensure the future financial soundness of FHA programs that are obligations of the Mutual Mortgage Insurance Fund (MMIF).

Under risk-based premiums, however, no qualified borrower will be charged by the mortgage lender in excess ofthe current statutory upfront and annual mortgage insurance premium limits. Additionally, this notice, when issued in final, will replace FHA's Mortgagee Letter 00-38, which identifies the current mortgage insurance premiums for FHA's single family programs.

Comments regarding this notice should be sent to;
Regulations Division
Office of General Counsel
Department of Housing and Urban Development
451 Seventh Street, SW. Room 10276
Washington, DC 20410-0500.
Communications should refer to docket number FR-5171-N-01 and aforementioned  title.

Comments should preferably be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov.

All comments are due by October 22, 2007.

Any questions regarding this notice should be addressed to;

Margaret Burns, Director
Office of Single Family Program Development
Department of Housing and Urban Development
451 Seventh Street, SW.
Washington, DC 20410
(202) 708-2121