NAR Urges Reinstatement of FHA Mortgage Premium Reduction
On January 30, NAR penned a letter to Department of Housing and Urban Development (HUD) Secretary Designee Ben Carson urging that the Federal Housing Administration (FHA)reinstate the 25 basis point reduction on the annual mortgage insurance premium that would have applied to mortgages with a closing or disbursement date of January 27, 2017, or later, and to eliminate the life loan insurance premium.
The letter makes the following key points:
- The premium reduction would have reduced costs for 750,000 to 850,000 homebuyers in 2017 with mortgages backed by the FHA and would have made homeownership possible for an additional 30,000 to 40,000 homebuyers.
- The suspension of the premium reduction has created uncertainty and confusion for a significant number of borrowers, sellers, lenders and underwriters who entered into a new or refinance mortgage transaction in reliance on the reduced rates.
- Reducing the premium would keep FHA’s capital reserves on a steady rate of growth and optimize the Mutual Mortgage Insurance Fund size, which would be in line with the treatment of other government insurance programs like the FDIC.
- Eliminating the life of loan requirement will reduce a borrower’s monthly payments, providing with them more cash on hand so they may better withstand economic shocks and thereby reduce defaults.
In addition to the letter, NAR Chief Economist Lawrence Yun made an appearance on C-SPAN for an interview, Housing Policy Under the Trump Administration, in which he talked about the new administration’s approach to housing policy, the suspension of planned mortgage premium cuts and other topics as he fielded calls and questions from homeowners,renters and others. Click here to view the interview.