Home buyers that have been pushing back their purchase until after the January 27 FHA premium cut just received some troubling news.
As of an hour after the new administration assumed the presidency, a pending rate cut for mortgage insurance required for FHA loans has been suspended. These loans were popular with first-time home buyers and those with poor credit.
The Department of Housing and Urban Development send out an announcement in a letter, found here..
“FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers,” the letter stated. “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.”
Prior to leaving office, the Obama administration cut FHA mortgage insurance premiums for the second time in two years. At the time of this cut, many in congress expressed concern that the rate cut could cost taxpayers if the market were to destabilize and the Federal Housing Administration couldn’t cover the losses. The agency needed a $1.7 billion bailout in 2013 after the collapse of the subprime mortgage market.
The cut came as no surprise. An article by HousingWire on these rate cuts claims multiple sources have been stating they had plans to examine the premium cut once Trump was sworn in.
The Department of Housing and Urban Development has not yet released a timeline for an incoming decision. The cuts have been indefinitely suspended.