Tags: Trump Administration | donald trump | mortgage | president | homeowners

Realtors Disappointed as Trump Cancels Cuts to Mortgage Premiums

Realtors Disappointed as Trump Cancels Cuts to Mortgage Premiums

(Stock Photo Secrets)

Sunday, 22 January 2017 08:43 PM

The Trump administration, hours after taking office on Friday, suspended a plan to cut mortgage insurance premiums on federally insured home loans that the U.S. government had estimated would save eligible homeowners an average of $500 a year.

The move immediately drew fire from Democrats, and it offered an early example of the potential conflicts ahead as Republican President Donald Trump rolls back measures put in place by his Democratic predecessor, Barack Obama.

"In one of his first acts as president, President Trump made it harder for Americans to afford a mortgage," U.S. Senate Minority Leader Chuck Schumer said in a statement.

"Actions speak louder than words," Schumer said. "One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages."

Schumer said the cut equaled an average of $500 per year.

Trump officials did not reply to emailed questions.

The reduction in Federal Housing Administration (FHA)mortgage insurance premiums was announced just last week by the Obama administration and had been due to take effect on Jan. 27.

The reduction "has been suspended indefinitely," pending further research, the Department of Housing and Urban Development (HUD) said in a letter to participants in FHA loan programs. The letter was signed by Deputy Assistant Secretary for Housing Genger Charles.

When asked for more information, a HUD spokesman referred back to the letter, which said that "more analysis and research are deemed necessary."

The action will affect millions of homeowners with an FHA-backed mortgage. FHA backs about 16% of the country's new mortgages. FHA loans offer easier credit requirements, lower down payments and smaller closing costs, according to the U.S. Department of Urban Housing and Development. 

Realtors were disappointed with the action, which Trump hadn't indicated he planned to take in his first day in office.

“It would’ve dropped the mortgage insurance rate by a quarter of a point, which would allow first-time home buyers to buy more houses, higher-priced houses, and more of them would be able to qualify,” Peter McKee of Keller and Williams Real Estate in Delmar, New York told TWC News.

McKee says the decision has disappointed realtors.

“If you run it through the mortgage calculators, it would have allowed a $9,800 more expensive house to be purchased,” said McKee.

The increasingly popular loans allow first-time homebuyers to make down payments as low as 3.5 percent, compared to the traditional 20 percent.

William E. Brown, the president of the National Association of Realtors, said the cut would have allowed more people to qualify for a mortgage because more borrowers could meet the debt-to-income ratio required to borrow money, USA Today reported. That cut would have saved home buyers about $29 a month on a $200,000 mortgage.

Obama's HUD Secretary Julian Castro said on Jan. 9 that the premiums would be cut by 0.25 percentage point to share with U.S. homeowners recent gains in FHA's Mutual Mortgage Insurance Fund, which has recovered from the financial crisis almost a decade ago.

FHA, part of HUD, offers mortgage insurance, often to first-time home buyers and those on low incomes. The insurance protects lenders in case of defaults. HUD said cutting the premiums would help about 1 million households.

HUD's decision to lower the premiums by a quarter-percentage point earlier this month divided lawmakers, with Republicans accusing the Obama administration of putting taxpayers at risk of a potential bailout of the FHA.

"Just three years ago the taxpayers had to spend $1.7 billion to bail out the FHA," House of Representatives Financial Services Committee Chairman Jeb Hensarling said on Jan. 9 when the premium cut was announced.

"Playing politics with the FHA through cynical, surprise 11th hour rule changes is irresponsible," Hensarling said.

HUD had projected that the reduced premiums would have saved FHA-insured homeowners an average of $500 in 2017.

Ben Carson, Trump's nominee to head HUD, told Congress last week during a hearing on his nomination that the incoming administration planned to examine the decision closely.

Shares of mortgage insurers MGIC and Radian closed up less than 1 percent on the New York Stock Exchange.

© 2020 Thomson/Reuters. All rights reserved.


   
1Like our page
2Share
Economy
The Trump administration, hours after taking office on Friday, suspended a plan to cut mortgage insurance premiums on federally insured home loans that the U.S. government had estimated would save eligible homeowners an average of $500 a year.
donald trump, mortgage, president, homeowners
694
2017-43-22
Sunday, 22 January 2017 08:43 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved