NAHB sent a letter to HUD Secretary Ben Carson on March 9 urging the secretary to reinstate previously announced premium reductions on FHA-insured mortgages that were due to go into effect on Jan. 27 but suspended by the Trump administration.
A mortgagee letter was issued on Jan. 9 that would have reduced the annual mortgage insurance premium (MIP) by 25 basis points to 60 basis points for FHA-insured mortgages with less than a 5% down payment and to 55 basis points for mortgages with a down payment of 5% or more. The changes would have been effective for FHA-endorsed mortgages with a closing date on or after Jan. 27.
NAHB strongly supported this action by the outgoing Obama administration, noting that lower premiums would make home loans more affordable, help to ease tight credit conditions and represent sound policy given recent actuarial reports which show that FHA continues to strengthen its financial reserves.
However, one of the first actions by the Trump administration was to indefinitely suspend the FHA MIP cuts so that the new administration could do its own analysis on the strength of the Mutual Mortgage Insurance Fund.
In the letter to the HUD secretary, NAHB said that “we believe the results of such an analysis will find that the lower MIP rate will expand homeownership opportunities for FHA-eligible borrowers without negatively impacting the Mutual Mortgage Insurance. Fund. Thus, we strongly urge you to promptly reinstate the previously announced MIP reduction.”
For more information, contact Curtis Milton at 800-368-5242 x8597.