A summary from a letter from the National Association of REALTORS®; click here to read the full letter from NAR to Dr. Ben Carson, Housing and Urban Development Secretary Designate.
Background
- Trump administration has suspended the Federal Housing Administration’s (FHA) 25 basis point reduction of the FHA Annual Mortgage Insurance Premium rates for mortgages with a closing/disbursement date on or after January 27, 2017.
- FHA occupies a critical role in the nation’s housing finance system, with a mission to ensure access to mortgage credit is available to all Americans, in particular groups traditionally underserved by the private market, including low to moderate-income, minority, and first-time homebuyers.
- The National Association of REALTORS® estimates that the premium reduction would have reduced costs for 750,000 to 850,000 homebuyers in 2017 with mortgages backed by the FHA.
- An additional 30,000 to 40,000 homebuyers are now shut out.
Impact on FHA
- Suspending the premium reduction has consequences for the business of FHA.
- Lower fees helped FHA to retain better borrowers from refinancing to private mortgage insurers. It helped to improve affordability allowing many previously sidelined borrowers to qualify for a home purchase.
What needs to be done
- NAR urges FHA to reinstate the 25 basis point premium reduction and remove the life of loan premium as soon as possible.
- Homeownership is a key element of the American Dream and FHA makes that dream possible for millions of Americans.
