Hours into Trump’s presidency, Donald Trump’s administration has indefinitely suspended a reduction to the Federal Housing Administration mortgage insurance premium, which is a program Obama’s administration announced in his waning days in office.
In the statement, Trump’s administration asserts, “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.”
As a result, the plan to reduce annual premiums by 25 basis points from .85 to .60, will no longer be implemented. The cut to the FHA program had the potential to save the average FHA backed homeowner $500 in 2017.
The program was first announced earlier this month and was supposed to go into effect next week. Senate Minority Leader Chuck Schumer fired back at Trump’s administration on Friday and called for the 45th president to reverse his decision. “President Trump, with the flick of a pen, ended that new policy, making it harder for Americans of modest means to obtain their piece of the rock, the American dream — home ownership.
FHA supported loans help first time homeowners and low-income individuals buy a home. FHA loans help people put lower down payments. In effect, the insurance is required to help protect lenders just in case borrowers are unable to pay for their mortgage.
Early reports suggest that mortgage rates are expected to increase and the Obama administration’s decision to cut FHA loan premiums was seen as an effort to help people afford their mortgage payments.
But during Ben Carson’s confirmation hearing last week, Carson explained his concern over Obama’s decision to cut Federal Housing Administration loan premiums saying, “Certainly, if confirmed, I’m going to work with the FHA administrator and other financial experts to really examine that policy.”
According to reports, approximately 20% of all mortgages are FHA loans.