Trump Suspends The FHA Mortgage Cut Indefinitely
It was the first decision President Trump made on one of the Obama’s administration last orders of business. FHA offers mortgage insurance to protect lenders against possible defaults. The FHA-backed loans tend to have less stringent lending requirements and are extremely popular with people who are buying their first home.
House Republicans objected the rate cut, as it would have reduced how much money would be available to cover the defaulted loans. According to Julian Castro, Secretary of HUD, the FHA reserves were extremely healthy that the revenue decrease would have been sustainable.
William E. Brown, president of the National Association of Realtors, said based on estimates, there around nearly 850,000 homebuyers who will be subjected to higher costs and around 40,000 new home buyers unable to purchase a home without the reduction. The decision to reverse the cut is disappointing, but the agency will continue stating why the cut is necessary.
Housing Finance Policy Center Co-Director Laurie Goodman said the administration did not have time to review the cut, so they suspended it for a short time. She said the change was only marginal and would not have made a significant impact. Goodman said the cut was really low on her list of worries.