The Department of Housing and Urban Development announced it suspended the reduction of Mortgage Insurance Premiums, effective immediately.
HUD sent out an announcement just an hour after President Trump was sworn in on Friday, stating that the cuts have been suspended indefinitely.
The letter stated that the FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.
“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.”
Right before leaving office, the Obama administration cut FHA mortgage insurance premiums, marking the second time it reduced premiums in two years.
However, after Ben Carson, Trump’s choice to lead the Department of Housing and Urban Affairs, appeared last week before the Senate Committee on Banking, Housing, and Urban Affairs, the likelihood that the cut would take effect on Jan. 27 quickly diminished.
At the time, Carson said that the Trump administration plans to “really examine” the Obama administration’s decision to cut FHA premiums before determining a course of action.
This cut, however, doesn’t come as a surprise. Earlier this week, sources told HousingWire that the Trump administration would do more than just “examine” the FHA premium cut once Trump is sworn on.
Multiple sources stated that the FHA premium cut would be delayed by the incoming Trump administration.
The FHA’s flagship fund, the Mutual Mortgage Insurance Fund, recently reported its fourth straight year of growth, but only last year did the MMI Fund reach its Congressionally mandated threshold of 2%.
The MMI Fund exceeded that threshold by an even larger margin in 2016, reaching 2.32%, with much of the growth being driven by the FHA’s forward mortgage business, rather than its volatile reverse mortgage business as it had been in 2015.
When announcing the cut, Castro said the administration made the decision based on solid reasoning.
But despite outgoing HUD Secretary Julián Castro’s belief that the Trump administration wouldn’t roll back the cut, they were wrong.