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.”
On Jan.30, NAR sent a letter to the Secretary Designate, Dr. Ben Carson opposing the suspension of the 25 basis point reduction of the FHA Annual Mortgage Insurance Premium.
In announcing the suspension, HUD sent a letter to the industry 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.