One of the first acts by the administration of the newly inaugurated President Donald J. Trump was to suspend a reduction in premiums on government-insured mortgages.
Earlier this month, the Department of Housing and Urban Development announced a cut in mortgage insurance premiums on Federal Housing Administration-insured loans.
As a result of the reduction, outlined in Mortgagee Letter 2017-01, borrower-paid annual M.I. premiums on most new loans were expected to be lowered by 25 basis points.
The move, one of the last at HUD for the Obama administration, was applauded by the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors.
But on Friday,
less than two hours after Trump was sworn in, HUD issued Mortgagee Letter 2017-07 suspending the premium cut.
“This Mortgagee Letter communicates that Mortgagee Letter 2017-01, reducing Mortgage Insurance Premiums for loans with Closing/Disbursement date on or after Jan. 27, 2017, has been suspended indefinitely,” the letter stated. “FHA will issue a subsequent mortgagee letter at a later date should this policy change.”
The suspension is immediately effective.
The letter was signed by HUD General Deputy Assistant Secretary for Housing Genger Charles.
MBA President and Chief Executive Officer David H. Stevens, a liberal Democrat who served as Federal Housing Commissioner in the Obama administration, weighed in on the suspension.
“We recognize the administration’s need to examine the overall health of the insurance program and weigh that against the benefits of lowering mortgage insurance premiums,” Stevens said in a written statement. “Given that lenders have already started preparing for the MIP decrease, it is important that any new policy be implemented in a way that minimizes disruption for borrowers and lenders.”
NAR President William E. Brown was more disappointed about the suspension.
“According to our estimates, roughly 750,000 to 850,000 homebuyers will face higher costs and 30,000 to 40,000 new homebuyers will be left on the sidelines in 2017 without the cut,” Brown said in a written statement. “We’re disappointed in the decision but will continue making the case to reinstate the cut in the months ahead.”
The National Association of Home Builders didn’t immediately respond to a request for a statement.
