The new Trump administration has already made one of its first moves, directing the Department of Housing and Urban Development to suspend a recently announced program that would have reduced mortgage insurance rates for a number of new homeowners.
This reduction, which was announced [PDF] by the Federal Housing Administration on Jan. 9, would have reduced annual mortgage insurance premiums on most new FHA-backed mortgages by .25 percentage points. Mortgages worth more than $625,500 would have seen a larger reduction of .45 percentage points on their insurance premiums.
Shortly after President Trump was sworn in, HUD announced via Twitter that this program had been suspended indefinitely.
The planned changes to insurance rates were not set to go into effect until Jan. 27, and would have only applied to loans originated or disbursed after that date, so existing homeowners would not have been affected.
In the mortgagee letter [PDF] announcing the suspension, HUD explains:
FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers. As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.
The intention of the rate reduction had been to hopefully spur home-buying among consumers who don’t have the full 20% down-payment that is generally needed to avoid mortgage insurance. The move had been criticized by conservative lawmakers who view the FHA insurance program as high-risk.
by Chris Morran via Consumerist
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