New Administration Suspends FHA Cut that Would Have Lowered Monthly PMI for HomeBuyers
The Trump administration overturned a mortgage-fee cut under a government program that’s popular with first-time home buyers and low-income borrowers.
The Department of Housing and Urban Development on Friday said the agency is canceling a reduction announced last week while President Barack Obama was still in office. The Federal Housing Administration had planned to cut its annual fee for most borrowers by a quarter of a percentage point to 0.60 percent, effective on Jan. 27.
Republicans have argued in the past that reductions put taxpayers at risk by lowering the funds the FHA has to deal with mortgage defaults. A letter from HUD to lenders and others in the real-estate industry, sent after Donald Trump assumed the presidency on Friday, didn’t give an explanation of the decision. HUD spokesman Brian Sullivan said the agency would issue a statement soon.
Ben Carson, Trump’s nominee to lead HUD, FHA’s parent agency, said at his confirmation hearing last week that he wasn’t consulted before the fee reduction and was disappointed it was announced in Obama’s final days in office. Bloomberg
This will affect home buyers in Santa Clarita, and everywhere, that were looking forward to the savings in the monthly PMI attached to FHA loans.
The savings were roughly $100 a month on a $500,000 purchase price.