Trump Administration Suspends Mortgage Premium Rate Cut
The Department of Housing and Urban Development suspended a reduction to the annual mortgage insurance premiums borrowers pay when taking out government-backed home loans. The cut was announced during the final days of President Obama’s term and has since been “suspended indefinitely” by President Trump.
The cut reversal was a part of a memorandum from White House Chief of Staff Reince Priebus to all executive departments and agencies to freeze new and pending regulations from the previous administration.
According to the Federal Housing Administration, the cut, at a quarter of a percentage point, would have saved homeowners an average of $500 this year. Borrowers with larger home loans would have seen an even larger reduction in their premium rate.
“The capital ratio that is the statutory requirement minimum is 2%, it’s only at 2.32[%]—this strikes me as very little buffer above the minimum. And after all, as recently as 2013 the FHA needed a bailout,” said Republican Senator Pat Toomey from Pennsylvania, during his questioning at the confirmation hearing for HUD secretary, Ben Carson.
Borrowers with lower credit scores or those who cannot afford the traditional 20 percent down payment prefer FHA loans. However, recent increases in home prices, along with mortgage insurance premiums, can make monthly payments high.
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