CNBC tells MHProNews that for the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic’s chief economist, Sam Khater.
A manufactured home lender that does FHA loans told MHProNews off the record that this will be good for the industry.
Many people feel that this lower insurance premium, along with FHA’s 96.5 percent Loan-to-Value (LTV) lending, will make those mortgages more competitive with the GSE loans. Chris Freemott, an executive at Midwest Equity Mortgage in Oak Brook, Illinois, said, “If you want to call it a tennis match between Fannie and the FHA, they just returned Fannie’s serve.”
In a news release from HUD, Secretary Julián Castro said, “This action will make home ownership more affordable for more than two million Americans in the next three years. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
Mortgage bankers praised the decision. “It couldn’t come at a better time,” said David Stevens, CEO of the Mortgage Bankers Association. “February is the beginning of the spring market. I think it will have a definitive impact, particularly in the first-time homebuyer market.”
The reduction will likely come under scrutiny by some on Capitol Hill, as the FHA is still building its capital reserves and is not yet above the mandatory 2 percent minimum. It is back in the black, after having bled cash for two years.
McClatchy News reported that POTUS Obama used a speech in Arizona to address push back from conservative Republicans, who argued that lowering mortgage insurance premiums would leave taxpayers on the hook if the housing sector should go belly up again.
“These rates are for responsible buyers. We’re not going down the road again of financing folks buying things they can’t afford,” Obama said. “We’re going to be cracking down on that. We put in place tough rules on Wall Street, and we created a Consumer Financial Protection Bureau, and we’re really policing irresponsible lenders luring folks into buying stuff they can’t afford.” ##
Related story, linked here.
(Julian Castro photo credit: HUD)
