Just hours after being sworn in, President Donald Trump moved to suspend a plan to reduce the Federal Housing Administration’s mortgage insurance premiums that was set to go into effect on Jan. 27. The reduction had been announced on Jan. 9 by the outgoing Obama administration and Housing and Urban Development head Julian Castro.
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The reduction in premiums by 25 basis points, or a quarter percentage point, “has been suspended indefinitely,” according to an FHA news release. “More analysis and research are deemed necessary to assess future adjustments,” according to FHA.
National Association of REALTORS® officials estimate that, without the cut, about 750,000 to 850,000 home buyers will face higher costs, and 30,000 to 40,000 new home buyers will be left on the sidelines in 2017. It was estimated that FHA borrowers would save an average of $500 per year with the reductions in place.
“We’re disappointed in the decision but will continue to make the case to reinstate the cut in the months ahead,” NAR President William E. Brown said.
Sources: NAR, “Trump Already Suspends Obama-Era FHA Mortgage Insurance Cuts,” MarketWatch (Jan. 21, 2017) and “FHA Suspends Planned Mortgage Insurance Cut,” Scotsman Guide (Jan. 20, 2017)