FHA mortgage premium cuts helping low-income homebuyers cancelled by President Trump
Soon after he was sworn in as the 45th president of the United States, Donald John Trump set to work signing executive orders. And one of his first actions was to roll back a discount on the fees for a federal mortgage program that helps middle-class homebuyers.
Last week, the outgoing Housing and Urban Development secretary, Julian Castro, said the Federal Housing Administration would cut its fees on mortgage insurance starting Jan. 27. The FHA backs mortgages for homebuyers with less-than-perfect credit scores or who put down small down payments. About 1 in 5 mortgages is backed by the FHA, according to reports. The program is particularly popular with low-income and first-time homebuyers.
Castro said the cut, of a quarter of a percentage point, was necessary to offset rising mortgage rates. If it had gone in effect, it would have saved a homebuyer borrowing $200,000 about $500 on their yearly insurance premium.
But on Friday, HUD, which administers the program, said the reduction was “suspended indefinitely.”
Democratic leader Chuck Schumer denounced Trump’s move, speaking on the floor of the Senate.
“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.
Ben Carson, Trump’s nominee to lead HUD, told a Senate committee last week he would “really examine” the interest-rate cut.