The U.S. Department of Housing and
Urban Development announced Jan. 20 that it was suspending indefinitely the FHA
premium rate cut that had been expected to take effect on Jan. 27. HUD had
announced the reduction Jan. 9, saying continuing strength in FHA’s reserve
fund, the Mutual Mortgage Insurance Fund, warranted the move. NAR estimated the
reduced premium would save the average FHA borrower $500 a year in insurance
costs.
NAR President William E. Brown
released a statement Friday in response to the announcement: “According to our
estimates, roughly 750,000 to 850,000 homebuyers will face higher costs, and
30,000 to 40,000 new homebuyers will be left on the sidelines in 2017 without
the cut. We’re disappointed in the decision but will continue making the case
to reinstate the cut in the months ahead.”
In announcing the suspension, HUD
sent a letter to the industry (link is external) saying it would “issue a subsequent Mortgagee Letter at a later date should this policy change." In the letter, HUD expressed its commitment to the continued long-term viability of the mortgage insurance program.
Source: NAR