FHA Ends Post-Payment Penalties

The Federal Housing Administration is overhauling a long-held policy of charging extra interest payments on loans it insures to borrowers who have already paid off the principal debts on their mortgages. FHA has permitted its lenders to charge borrowers a full month of interest when they sell or refinance a home,even if borrowers had paid off the mortgage weeks prior to the end of the month. FHA had argued that its bond investors,who purchase packages of insured mortgages,expected full-month payments of interest plus principal.

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