FHA Premium Cut Officially Reversed; Mortgagee Letter Already Out

News

As was being widely rumored yesterday, the newly
installed Trump Administration has indefinitely suspended a scheduled reduction
in the annual premium for Federal Housing Administration (FHA) insurance.  A 25-basis point reduction in that premium
was announced by then Housing and Urban Development (HUD) Secretary Julian
Castro on January 9, scheduled to go into effect on January 27.

Mortgagee Letter 2017-07 was issued about an hour
after
Donald Trump took the oath of office as President, counteracting the
earlier Mortgagee Letter 2017-01.  The new
letter says “FHA will issue a subsequent Mortgagee Letter at a later date
should this policy change.”

 

 

The Mortgage Bankers Association (MBA) reacted
immediately to the shift.  David H.
Stevens, President and CEO, issued the following statement on behalf of MBA.

“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. 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. MBA looks forward to working
with the new Administration to ensure the long-term stability of the FHA
program, creating an environment that provides clarity in regulations for lenders
while at the same time promoting access to credit and protecting
consumers.”

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